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Monthly CIS Statements

Following the introduction of the new CIS scheme in Apr 07, the vouchers have all been replaced by payslips/monthly statement of earnings. In the past, when a tax return was submitted, we would have attached the CIS vouchers as proof of CIS tax suffered, although it appears that even in the past, it was not mandatory that tax returns be accompanied by the vouchers, except where the tax office did not receive their copy of the voucher.

For the current year 2007/08, when we submit the tax return, do you need to send the payslips/statement of earning along with the tax return? Having reviewed some of the statements of earnings issued by some contractors it appears there is no consistency in the format or frequency of their issuance as some of them have issued monthly, weekly, or fortnightly. Therefore it would be a job of huge logistical proportions if we were to summarize and submit all the 52 statements of earnings issued over a period of a year for each subcontractor. Furthermore, having reviewed the guidance notes for the completion of the SA tax return as well as the SA2008 tax Return guide, we have not seen mentioned anywhere that these payslips should accompany the tax return. If we have missed the note anywhere, we would be grateful if anyone could point us to the right direction.

Assuming a contractor failed to return details of all the subcontractors on their monthly return, although he might have issued payslips for those periods, will it be acceptable to the tax office if we send in the payslips covering the missing periods?

Any answers will be hugely appreciated.
kailash khagi

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Deduction statements
HMRC have called them deduction statements rather than payslips - presumably because they have to show certain specific CIS items, such as the end of the tax month in which the payment is made, the sub-contractor's UTR and the verification code. They are required at least once a month, but can be issued whenever a payment is made if more frequent.

I agree with Chris that you should not submit them to HMRC with the sub-contractor's tax return. They are now just like any other tax certificate - P60, P45, dividend voucher, interest certificate, etc. - that you or the client needs to keep to support the tax return, but which you do not submit with the tax return.

You will presumably prepare a sub-contractor's tax return - in terms of both gross income and tax deductions - from the CIS deduction statements he gives you. If HMRC ties them up with the relevant contractor's return and find a discrepancy, they may ask you to produce the statements to prove the tax deduction you have claimed, which you will obviously then be able to do.

My only concern would be if the sub-contractor gives you "payslips" which are not valid CIS deduction statements. If they are covered by one proper deduction statement covering all the payments in a month, you would ignore them (just as you would salary payslips covered by a P60). The problem arises if the "payslips" do not appear to be included on any deduction statement - you ought o be sure that they are genuine before including the income and tax, but as CIS tax is now being deducted at the basic rate, it will not affect the overall tax position in most cases. I assume that these "payslips" do not include any NI deductions, in which case they would be employed wages.

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No
Dont send, just hold in case asked for.

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