Author: JW / / Latest News
If so, are you making the correct deductions?
All payments should be subject to CIS deductions except the cost of materials, the hire cost of plant actually hired in (not owned) and fuel for plant/machinery (not travel).
This information can be found in HMRC’s CIS manual at paragraphs 3.12 to 3.14 please follow the link. https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14000
HMRC have recently taken a case to tribunal on this where tax was not being deducted from the likes of travel, lodge and ‘use of tools’. The taxpayers company as part of their defence stated ‘everyone does it like this’.
So, HMRC are now on a purge to check what elements of total payments to subcontractors are not being subjected to a CIS tax deduction.
If you’re not applying the rules correctly, you will need to correct this going forward.
Please be aware if HMRC pick you up on the issue, it could be costly.