ECH21155 - CIS until 05-04-07 - Application for a Certificate - Knowingly or Recklessly Making a False Statement or Furnishing a False Document

Only subcontractors with a valid certificate could receive payments gross (without CIS deductions). ( ECH14410).

When applying for a certificate a subcontractor had to satisfy the

• Turnover Test (CIS Manual CIS3201)
• Business Test (CIS Manual CIS3301) and
• Compliance Test (CIS Manual CIS3401).

A subcontractor who

• made a false statement or
• furnished a false document
• for the purposes of obtaining a certificate and
• did so knowingly or recklessly

may become liable to a penalty not exceeding £3,000 under S561(10) ICTA 1988.

More guidance can be found in the CIS Manual at CIS3221

Where a CIO identifies or suspects that a false statement has been made or a false document provided in order to obtain a certificate and a penalty may be appropriate they should

• establish the reasons why false information was provided ( ECH8045) and
• whether the application for a certificate would have been successful had the correct information been provided.

In cases where the CIO establishes that the application for a certificate would have been unsuccessful the CIO must

• consider whether the subcontractor is currently registered for gross payment,
• whether cancellation of gross payment is appropriate ( ECH14650)
• send a memo to the relevant Business Team detailing the problems identified and action taken and
• consider a penalty under S561(10) ICTA 1988 (see below).

In cases where the CIO establishes that the application for a certificate would still have been successful the CIO must

• provide advice to the subcontractor about the importance of providing correct information on any application for registration and
• send a memo to the relevant Business Team detailing the problems identified and action taken.

Where a penalty is appropriate the CIO must make a submission to Tax Administration Advice