CIS Pay and Tax Enquiries

CIS Pay and Tax Enquiries

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Hi

Recently we have seen an increase in Section 9A TMA 1970 checks. These focus mainly on the difference between a client’s CIS pay and tax details as declared on the return and HMRC’s own records. Even last year we received quite a few such letters under ‘Compliance Checks’. It seems these are now treated under Section 9A back again.

Up until Mar 08 we were able to phone/write to HMRC and obtain CIS pay and tax details as held by them, so that we could compare what client has brought in and what is being held by HMRC in their records. However since then, it has become almost impossible to obtain such details. More often than not the records held by client are not accurate because a) they do not have all the payslips/monthly statements of pay and deduction and b) the contractor’s returned figures are sometimes different from the payslips/deduction statements c) the contractors are no longer in business- therefore impossible to contact/obtain the statements d) bank statements are incomplete/monies banked not reconcilable etc. We have seen these enquiry letters being issued even for such minor differences in income of £80 with tax credit of £16.

It is frustrating enough when clients do not bring in complete accounting records and when they do bring in, they often do not match with HMRC records. We are wondering how other practitioners are coping with this problem? Usually the figures HMRC holds are higher than what has been declared, meaning the subcontractor has to pay back the difference. Interestingly we have never seen an enquiry letter issued for a tax return showing a higher figure than HMRC’s records. We also note that information relating to PAYE income and tax details is readily provided by HMRC.

We are interested to know if any practitioners have been successful enough to obtain the CIS pay and tax details from HMRC. If so it would be interesting to understand how you have managed to do so. When we send in a request, they come back with the standard response stating it is the tax payers’ responsibility to keep hold of all accounting records and HMRC is not responsible for providing it as it takes a lot of their resources etc. However, once the return is sent in, we receive these enquiry letters along with a full statement of the subcontractor’s annual tax and pay details attached. Had this information been made available to us earlier when we requested, this enquiry would not have resulted. We have also had instances where HMRC’S records included someone else’s pay and tax details and HMRC had to amend their records.

We would like to hear other practitioners’ views and experiences in this issue.

Thank you.

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