HMRC has launched a campaign focussing on the Contractor Industry Scheme (CIS). Targeting specific sectors is not unusual. Known as a “One to Many” letter campaign, construction businesses are being asked to check their CIS compliance.

It’s important to note that receiving the One to Many letter does not mean that your construction business falls short of CIS requirements. HMRC adopts a broad approach, assuming some – not all – recipients do not meet their obligations.

If you receive a CIS One to Many letter …

As a CIS contractor, HMRC asks you to:

• verify all new subcontractors before they are paid,
• verify subcontractors you’ve worked with but haven’t included on a CIS return in the current or last two tax years, and
• ensure that the correct CIS deductions are applied.

Verification should be done using the formal HMRC verification process. Once completed, you need to inform HMRC that this has been done with no errors found. (If errors are highlighted, these must be addressed.)

HMRC asks that these steps be taken within 45 days from the date on which the letter is received.

CIS compliance

The current HMRC campaign is targeting the correct verification of CIS subcontractors. Other aspects of CIS regulations could be investigated in due course. Verifying your subcontractors’ tax status is important. Whilst doing this we urge you to check compliance with the wider CIS issues such as whether CIS applies to all payments for work undertaken.

If you have any doubts or queries, please talk to the team at Spicer & Co Chartered Accountants in Dunstable. We specialise in the construction sector and can offer practical, bespoke advice based on our expert knowledge of the compliance and tax issues involved.

Let’s arrange an informal discussion without obligation.