ECH14265 - Construction Industry Scheme: CIS - General - New Schemes - Previously Pseudo Schemes

Where a review is being undertaken

• for a contractor who has not previously registered as a contractor and
• a scheme has been set up by RISK to allow the review to be recorded and
• irregularities are discovered

the CIO should

• calculate and recover the CIS deductions due up to the end of the last return period
• calculate and recover interest for all periods up to the end of the last tax year. ECH12085
• consider penalties in accordance with ECH21020 and ECH21025 for all years for which a form CIS36 should have been submitted and
• consider penalties under ECH21000 onwards for all months where a CIS300 should have been submitted.
• arrange for the Scheme to be opened or re-opened where the Scheme was opened and closed on the same day to facilitate the review.

When opening the Scheme the CIO must

• arrange for the Scheme to be opened from the correct date but
• ensure that returns and penalties are not issued for periods that have been included in a contract settlement.

For periods up to 05-04-07 the CIO will

• take action to ensure penalties are inhibited on ECS.

For periods after 06-04-07 the CIO will

• follow the attached flowchart.

It will be unusual for subcontractors to have suffered deductions in this situation but if they have or if they then make good the deductions to the contractor the subcontractor is entitled to a credit for the deductions. If this is the case the CIO should

• follow the guidance at ECH14215.