Construction industry scheme

We are writing to you with regard to the construction industry scheme (CIS).

We have the case of a client who engages a number of subcontractors under CIS and who operates his business as a sole trader.

For a number of reasons when his 2005 tax return was completed there was an error in the accounts. When his 2006 tax return was completed this error was spotted and corrected and a repair made to the 2005 tax return within the time limits.

The net effect was that our client paid the extra tax on time but there was an amount of interest that was outstanding and this was not settled until 30 March 2007.

The statement upon which this interest was shown was dated 27 February 2007.

We received a letter from HMRC dated 3 January 2008 but not received by us until 14 January 2008 ...