CIS Enquiry

MrNiceGuy_007

Hello

I have made a payment to a subcontractor who falls under the Construction Industry Scheme. However I only deducted 20% from the labour on his invoice. I did this before I verified the details that were given. Once I put the details on the HRMC’s system it came back as not registered and to tax at 30%. I have since tried to obtain the correct details to make it 20% but the sub con is refusing and has said the outstanding money is to be paid directly to him. I know this is not correct and Tax must be deducted.

How can I fix this issue? Because I have already paid!!!

System

What money is outstanding?

chrismac1

The first thing for future is simple and one I unfortunately tell clients quite a lot:

"No UTR, no payment unless 30% is deducted."

Funnily enough, when this is made clear to subbies they are suddenly able to produce a UTR at 100 miles per hour! In this case if you are going to do any further business with this subcon, make the adjustment on the next payment. If not you are not in a great position.

On the one hand it's not worth the risk of short paying HMRC, as you've then deliberately non-complied and that could be very serious. You are also in the sector most likely to get a visit, so don't even consider this option.

Legally you are probably not in a great position here. You're supposed to verify subbies and then make payments, not the other way around. If the subbie refuses to play ball, would you win a legal case? If you did, would it be worth it - or would you get 50 pence a week for the next few years?