CISR11040 - The Scheme: overview: making scheme payments to un-matched subcontractors paid under deduction at the higher rate

An un-matched subcontractor is one that the contractor is unable to verify with HMRC. Generally, this will be where the subcontractor has failed to register for the Scheme but quite often it will also include situations where the subcontractor has given inaccurate information to the contractor.

Where this has happened, it may lead to the contractor being unable to verify the subcontractor with HMRC simply because we cannot identify the subcontractor on our systems.

Before making any payment to the subcontractor the contractor should, after first being satisfied that the contract with the subcontractor is properly one of self-employment

• attempt to verify the subcontractor (See CISR50000 for more guidance on verification).

Where the subcontractor cannot be verified - for whatever reason, we will tell the contractor that the subcontractor is 'un-matched' and that the contractor must make a deduction at the higher rate from that subcontractor's payments. A special reference number will be given to the contractor to enable future identification of this transaction by the subcontractor.

On making payment, the contractor should

• refer to form CIS29 (Making and remitting deductions from subcontractors)
• calculate and make the appropriate deduction from the payment to the subcontractor (A deduction at the higher rate in this example), and
• record details of payment, materials and deduction.

Within 14 days of the end of the tax month in which the payment or payments were made, the contractor must

• give a 'payment and deduction statement' to the subcontractor, showing

• pay over to HMRC the sums deducted.

See CISR12150 for more information about the subcontractor’s payment and deduction statement.