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CIS failure to operate and mistakes

CIS failure to operate and mistakes

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In response to demand for house extensions etc. caused by covid-19 an enterprising brickie secured construction contracts and set up a company to carry out the work.  Problems include:

1.  He did not operate CIS for contractors issuing invoices.  Some of these labour-only subcontractors went as far as issuing invoices for ‘quote creation’ or ‘consultancy’.  He promised to try put things right in the future.  What are the accountant’s obligations re this?

2.  Where CIS was operated, he underreported payments to subcontractors and underpaid CIS tax.  Subcontractors are paid weekly and in 2021/22 payments in week 5 were somehow overlooked.  Is it OK to put right by adding underpayments to the next return?

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RLI
By lionofludesch
24th Nov 2021 09:59

1. My experience is that HMRC don't fuss too much about minor errors provided the business is generally fulfilling its obligations. Not much help to you, perhaps, as it's all very subjective. The trouble is, of course, that the contractor may get caught for the deduction he should've made but often can't recover it from the subcontractor. I have notified errors on behalf of clients in the past but no-one seems very interested. If you're toey about it and need to salve your conscience, it might be quite a good wheeze to write a letter detailing all the errors and see if they get assessed. I've had a mixed response (or lack of one) to this.

2. I wouldn't worry about petty timing differences. Just get it right in the future.

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By Paul Crowley
24th Nov 2021 10:21

Brickie and subbies were clearly deliberately looking to evade the sysyem
No problem for subbies if they declared. but that seems unlikely given the false descriptions of their work
Brickie co could end up with the the tax that should have been deducted as just extra tax payable

Not difficult to see why HMRC consider the Construction industry as in need of a permanent compliance team

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Replying to Paul Crowley:
RLI
By lionofludesch
24th Nov 2021 10:34

Paul Crowley wrote:

Brickie and subbies were clearly deliberately looking to evade the sysyem

Why "clearly" ?

Why can't they just be thick ?

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Replying to lionofludesch:
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By Paul Crowley
24th Nov 2021 10:52

"Quote creation" and "consultancy"

In real life there are lots of subcontractors that look not to be classified as such
Windows and floors being prominent from my last chat with someone sorting out a barn

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Replying to Paul Crowley:
Danny Kent
By Viciuno
24th Nov 2021 12:26

Paul Crowley wrote:

Not difficult to see why HMRC consider the Construction industry as in need of a permanent compliance team

To be fair, although maybe most obvious in this sector, you get the same chancers, con-men, fraudsters in all industries. I've seen a fair few "blue collar job" type clients not pay their VAT, PAYE etc

If they had proper compliance checks for all businesses there would be no need to faff around with the likes of CIS and DRC.

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Replying to Viciuno:
paddle steamer
By DJKL
24th Nov 2021 12:33

That might involve HMRC actually investing in their staff re both training and retention, that is I am afraid not the 21st century model.

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