ECH21235 - CIS from 06-04-07 - Failure to Make a Declaration (Form CIS300)

The CIS300 contractor monthly return includes a declaration

• that none of the contracts to which the return relates is a contract of employment,
• that each subcontractor on the return has been verified or included on previous CIS returns in the last two years and
• that the return is correct and complete.

Regulations 4(5)(a) - 4(5)(c) Income Tax (Construction Industry Scheme) Regulations 2005 require a contractor to include this declaration in the return.

A contractor who fails to complete the declaration can be liable to an initial penalty not exceeding £300 followed by daily penalties not exceeding £60 per day until the declaration is made. The provision for this penalty is S98(1)(b) TMA 1970.

The initial penalty is determined by the First-tier Tribunal and can be sought even after the failure is rectified. Daily penalties can be authorised by a Grade 6 officer but only as long as the failure continues.

When a contractor has failed to make a declaration on the return you must

• explain that a declaration is required and
• request that the contractor complete a declaration but
• make sure that the contractor understands that the declaration must be true as making an incorrect declaration is a penalty offence.

You must

• consider a penalty for failure to make a declaration wherever a contractor has failed to make a declaration or has made an incomplete declaration on the return and
• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)

(This text has been withheld because of exemptions in the Freedom of Information Act 2000) 

Where a contractor is also a subcontractor and is registered for Gross Payment you must consider whether any failure to comply with CIS is sufficient to warrant a change in tax treatment. Further guidance is at

• ECH14650 Cancellation of Gross Payment Registration

In cases of doubt or difficulty advice can be sought from TAA (Liverpool) (This text has been withheld because of exemptions in the Freedom of Information Act 2000) 

Where a contractor has made an incorrect declaration on the return you must

• consider a penalty in accordance with ECH21240.