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Whose responsibility to provide CIS certificate of tax deducted under old rules

Hello All

We have a client under enquiry for 2006/07.  Our client is a builder working almost exclusively as a subcontractor under the then CIS scheme.

HMRC are contesting some bankings on his bank account which relate (according to our client) to income earned from a main contractor.  Contractor did not provide CIS certificate or other evidence of tax paid. 

HMRC are refusing to give credit for the tax credit claimed under CIS, thereby leaving our client with a tax liability.  They are also seeking to charge a penalty.  

We have evidence that our client has made every effort to obtain a CIS certificate/proof of deduction.  He does have remittance advices from this contractor which give the contractor's UTR no and VAT no.  He used these to make his SA return. (he did this himself and we did not act at this time). 

It seems unequitable that HMRC are seeking to tax our subcontractor because of the apparent failings of the contractor. I intend to rebut the point on the basis that it is the contractor's duty to provide a certificate of tax deducted and there is nothing else our client could have done, given his efforts.  He can prove the payments came from the said contractor by reference to copy cheques and remittance slips/bank references. 

Any opinions particulary with direction to the appropriate legislation would be most welcome.

Many thanks

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22nd Sep 2009 09:24

You may have already tried
Have you asked the Inspector to confirm CIS record for your client for the year in question.

They should still be able to confirm the payments made to your client and the tax deducted as the payments will have been declared by the contractor so that you can see if they agree to your figures.

You should be able to confirm the contractors reference to help them with the search.

They will of course tell you that this information should have been kept by your client but then you can see where you stand as it may be that the contractor has not been declaring the payments made to your client.

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By Anonymous
22nd Sep 2009 10:33

Thanks to the previous poster - however...

yes, I have obtained a print of the CIS paytments from HMRC and no, the payments do not show up.  Inspector is  saying that this income from his b/s is therefore private income.  This appears wholly inequitable- our client could have done nothing else to attempt to obtain the certificate and can prove where the payments came from. 

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By Bronco
22nd Sep 2009 10:43

Whose responsibility for CIS Cert.
I assume you have checked that the remitted amounts equal the Daily/Hourly rate paid, less the tax deducted, and the declared income was the gross figure.

If that is correct then I would request a review by another Inspector, or alternatively apply for a commissioners hearing, would also suggest that if any further correspondence a copy be sent to the officer in charge.

Sorry I am unable to point you to any legislation.

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22nd Sep 2009 11:03

Looks like this could be the failing of the contractor
You say you have evidence to show that the payments came from the contractor in question and so the failure falls on the contractor rather than your client. I don't suppose your client has invoices that match the payments received.

Did the contractor provide any CIS25's to your client during the year in question and did the Revenue list any payments from the contractor in question.

I would suggest your angle in the enquiry is to show this is a failure by the contractor to pay over the tax deducted rather than you client's failure to declare income.

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