Incorrect construction industry scheme tax deductions prompt HMRC letters to contractors

HMRC is writing to contractors as part of its one-to-many campaign asking them to verify the construction industry scheme (CIS) status of their subcontractors regularly reports the Institute of Chartered Accountants in England and Wales.

HMRC states that some contractors have made incorrect CIS tax deductions and they must verify all new subcontractors before they pay them. They can do this by using HMRC’s free CIS online service (tinyurl.com/fudwfmc8) or commercial software (which must be used to verify more than 50 subcontractors). Contractors must also verify subcontractors they’ve used before if they haven’t included them on a CIS return in the current tax year or the previous two tax years; and they must make sure they apply the correct CIS deductions.