CISR82030 - Compliance: Regulation 13 determinations: warning of intention

Compliance: Regulation 13 determinations: warning of intention

CISR82600 Action guide contents
   

Before you make a Regulation 13(2) determination you should write to the contractor to inform them of your intention, you should allow the contractor a period of 30 days within which to respond to your letter before making a determination under Regulation 13(2).

If you believe that there is likely to be a loss of tax to the Crown then you must issue immediate Regulation 13(2) determinations.

In particular you must consider this action in cases where you discover or suspect that:

  • the contractor intends to dispose of assets
  • the contractor intends to become non-resident
  • an individual contractor or a partner intends to apply for bankruptcy, or a company intends to go into liquidation
  • an individual contractor or partner may be about to go into prison.

In these circumstances there is no requirement to send the warning letter as described below.

The letter should be along the lines of the sample set out below under the heading ‘Sample letter’. It should inform the contractor of the reason for raising the determination, and set out the names of the subcontractor(s) covered and the amount(s) involved, since the determination does not include this. It should also invite a response that you can consider before raising the determination.

In some cases the issue of a warning letter will be enough to prompt a response from the contractor so that any problems can be resolved without the need to proceed with the determination.

You may need to set up a CIS record for the contractor where one does not already exist. This is explained at CISR31000 onwards.

Where you establish, as a result of the warning letter, that deductions properly due were not made, you will then need to decide whether there is a case for a direction under Regulation 9 (CISR83000). If not, proceed with the determination.

Sequence of events

The normal sequence of actions is as follows (where the Regulation 13(2) determination is not immediately issued):

  • warning letter
  • allow the contractor a period of 30 days within which to respond to the warning letter before raising a determination under Regulation 13.
  • consideration, if appropriate, of any claim for a direction under Regulation 9 (including appeal against refusal) where liability is admitted by contractor
  • Regulation 13 determination
  • appeal against Regulation 13 determination.

Sample letter

Note: This sample is not suitable for use in connection with subcontractor / contractor dispute cases.

I have reason to believe that you engage subcontractors within the scope of the Construction Industry Scheme and that you have made payments without making the necessary deductions. The relevant legislation is set out in the Finance Act 2004, sections 57-77 and Schedules 11 and 12.

In view of this, I intend to raise an determination under Regulation 13(2) of Statutory Instrument 2005, No. 2045 as detailed below.

(Year of determination)

(Amount of determination)

(Reason for determination)

(Names of Subcontractor(s))

(Amount of the deduction due from each subcontractor)

Any comment or response you might wish to make at this stage should be addressed to me at the address above.’