CISR69640 – Monthly Returns and the End of Year (EOY) Process: Insolvencies

In nearly all cases, the actions detailed in this Action Guide should be taken either by DMB or by the Insolvency Claims Handling Unit. Where you handle contractor insolvency cases and there is evidence that

• the contractor made deductions from payments to subcontractors, or
• had paid CIS deductions over to HMRC

and all possible attempts have been made to obtain the completed monthly return(s) for the relevant period(s) from either the contractor of the Trustee in Bankruptcy, Administrator or Liquidator, you should take the actions outlined below.

CIS deductions made from payments to subcontractors and contractor has since become insolvent

Where you have been given details of the payments made, materials element and CIS deductions made, for example, for the period 6th April 2009 to 30th August 2009, after the end of the tax year concerned, you should

• capture a contractor return for the month to 5th September 2009 that incorporates all the payments, the materials element and CIS deductions made for the period 6th April 2009 to 30th August 2009,
• set Return period exemptions (See CISR69050) for the months ended 5th May to 5th August 2009 inclusive, and again for the period 5th October 2009 to 5th April 2010 inclusive,
• make a note on ‘Record Contact’ of the actions you have taken, and the period that is actually covered by the return to 5th September 2009.

Having taken this action, CIS will then send a ‘Final’ figure across to BROCS which will create a charge for DMB to be taken into consideration in the insolvency process.

CIS deductions paid over to HMRC by a contractor who has since become insolvent

BROCS may show that the contractor made payments of CIS deductions to HMRC or you may have some details of the payments, materials element and CIS deductions made from payments to subcontractors, but these deductions represent less than that already paid over to HMRC by the contractor. Where for example, the last payment made to HMRC was made on 30th August 2009 take the following action after the end of the tax year concerned

• do not capture any ‘pro-forma’ contractor monthly returns on to CIS,
• make an estimate of the total liability due from the contractor and lodge a claim in the bankruptcy/insolvency for this amount. This action is supported by Reg 57 SI2005/2045,
• set Return period exemptions (See CISR69050) for all months affected including up to 5th April following the contractors Insolvency.
• make a note on ‘Record Contact’ of the actions you have taken, and the amount of the CIS deductions for which you have now lodged proof of debt.