HMRC is writing to contractors as part of its “one too many campaign”, asking them to verify the CIS status of their sub-contractors regularly, reports the Chartered Accountants in England and Wales. HMRC states that some contractors have made incorrect CIS tax deductions and they must verify all new sub-contractors before they pay them. They can do this by using HMRC’s free CIS online service or commercial software (which must be used to verify more than 50 sub-contractors). Contractors must also verify sub-contractors 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 make sure they apply the correct CIS deductions.
In a sample letter available on the ICAEW website, contractors are advised they have 45 days from the date of receipt to take action, and that failure to do so may trigger a compliance check.
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