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Contractors could claim non-liability for CIS amounts not deducted from payments to subcontractor

By Mark McLaughlin, August 2024

HMRC was not precluded from accepting a non-liability direction made by contractors in respect of CIS amounts not deducted from payments to a subcontractor, notwithstanding that an existing and prior determination of liability to pay the same amount had already been issued. 

The appellants (six contractors in the construction industry scheme (CIS)) made contract payments to a sub-contractor but did not make deductions under the CIS and did not pay to HM Revenue and Customs (HMRC) amounts that should have been deducted. HMRC made determinations of the amounts payable. Subsequently, the appellants requested HMRC to direct (pursuant to the Income Tax (Construction Industry Scheme) Regulations 2005, SI 2005/2045, reg 9(5)) that the appellants should not be liable to pay the amounts determined, contending that Condition B for making such a direction (in reg 9(4)) was met in that the sub-contractor was not chargeable to income tax or corporation tax.  <

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