Complexity of CIS shown in tribunal decisions

14 September 2021 / Alastair Kendrick

Issue: 4808 / Categories: Comment & Analysis

CIS complexity

The construction industry scheme (CIS) rules contain significant powers which HMRC can apply if it believes that a contractor has not complied fully with the rules.

Before looking at two recent First-tier Tribunal decisions Gelder Ltd (TC8236) and North Point (Pall Mall) Ltd and China Town Development Company Ltd (TC8205) it is worth looking at the specific rights of HMRC in these particular situations.

Regulation 9(4)

If HMRC believes there is a failure by a contractor to comply fully with the CIS rules it is permitted to seek recovery of any underpaid income tax arising from the failure from the contractor concerned. HMRC is however permitted not to pursue the contractor for any income tax which it believes is not ‘lost’. These powers are contained at reg 9(4) of the CIS Regulations SI 2005/2045 (tinyurl.com/cisregs2005reg9) and in the making of a direction under reg...

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