HMRC issues letters on childcare benefit values on P11D/P14 and Construction Industry Scheme
By Justine Riccomini, Head of Tax (Employment and Devolved Taxes)
1 August 2024
Learn more about the one-to-many letters HMRC is currently sending to employers and agents in relation to Construction Industry Scheme (CIS) and child benefit as it relates to P11D declarations.
HMRC has recently finalised communications to employers/contractors in relation to CIS – for which letters started to be issued on 22 July 2024. This concerns the CIS to ensure the correct tax deductions are being made by contractors.
A second communication was sent out to agents in the same week which relate to potential Self-Assessment discrepancies in 2022-23 returns relating to P11D and P14 claims, and the high-income child benefit charge (HICBC).
Construction Industry Scheme (CIS)
According to HMRC, “the primary aim of the letters is to prompt contractors to make the correct CIS Tax deductions by verifying the CIS tax status of their subcontractors and subsequently ensure they are applying the correct CIS Tax deductions on all payments being made. The letter advises recipients that our records show that some contractors have made incorrect CIS tax deductions, requests contractors to verify their subcontractors and sets out the steps for doing so (including signposting to appropriate guidance) to help them get their deductions right.”
The letter reads:
Dear Sir or Madam,
Make sure you’re making the right CIS deductions from subcontractors’ payments.
We’re writing to help you with your monthly Construction Industry Scheme (CIS) returns.
Our records show that some contractors have made incorrect CIS tax deductions. It is important you get these right. If you don’t, you may have to pay the tax yourself.
What you need to do by (45 days from date of receipt)
We need you to verify your subcontractors’ CIS status. You can do this by using (either):
- Our free CIS online service – go to GOV.UK and search ‘sign in to CIS’
- Commercial software – if you need to verify more than 50 subcontractors, you must use this option
If you use our free online service, we’ll tell you:
- If your subcontractor registered for CIS
- If you can pay them without making CIS deductions
- The right rate for any CIS deductions
You must:
- Verify all new subcontractors before you pay them
- Verify subcontractors you’ve used before if you haven’t included them on a CIS return in the current or last 2 tax years
- Make sure you apply the correct CIS deductions
We recommend you regularly verify the CIS status of all your subcontractors.
If you don’t take any action
We may start a compliance check. If we do this, we’ll write to you. If we start a compliance check and find errors in your CIS returns, we’ll treat any disclosure you make as prompted. This may affect any penalties you have to pay.
For more information, go to GOV.UK and search ‘HMRC compliance checks factsheets’, then choose ‘Penalties’.
More information
You can find more details online. To do this, go to GOV.UK and search:
- ‘Construction Industry Scheme’
- ‘CIS 340’ and read ‘Construction Industry Scheme: a guide for contractors and subcontractors’
If you need extra support
If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell us. We’ll help you in whatever way we can. For more information, go to GOV.UK and search ‘get help from HMRC if you need extra support’.
If you have any enquiries, please email us at ccgcistaxdeductions@hmrc.gov.uk
Yours faithfully
HM Revenue and Customs
High Income Child Benefit Charge (HICBC)
According to HMRC, “The Agent Compliance Team (ACT) is writing to engage with agents who have multiple clients exhibiting a P11D risk and/or P14 risk and/or HICBC risk with the objective of working with agents so they can agree with their clients an amendment program to rectify any errors made in their 2022-23 tax year self-assessment return as required.
We are asking the agents to contact ACT to discuss the taxable benefits, PAYE details, or potential HICBC liabilities of specific clients – details to be provided to agents upon contact/request. This is with a view to enabling agents to support their clients in correcting any errors as necessary or understanding any discrepancies.
The intention here being that a conversation with ACT will give agents the chance to work with the team to ensure any errors can be amended to reflect the correct position or discrepancies explained as necessary with one caseworker without the need for formal case enquiries, thereby removing some of the administrative burden of tackling these discrepancies individually, in a varied manner and at different points in time.
The letter makes it clear this isn’t a formal enquiry or compliance check on the agents or their clients and that contacting HMRC now is voluntary. It also states that ACT will attempt to contact the agent within the coming weeks to discuss the process further, but agents are welcome to contact the team directly themselves to arrange a time/date for the call.”
The letter reads:
Please check your clients’ Self-Assessment Tax Returns for potential errors for year ended 5 April 2023
We’re writing to you as part of our work to help tax agents maintain compliance standards.
We’ve been checking your clients’ Self Assessment tax returns for year ended 5 April 2023. We’ve found that in some cases, what they’ve declared doesn’t match either:
- P14 and P11D details their employers have given us
- Information we have about their Child Benefit.
We’d like to call you in the next few weeks; to let you know which clients’ returns we think may need amending.
If you’d prefer to engage sooner my phone number and e-mail address are at the top of this letter.
This isn’t a formal enquiry or compliance check. We want to help you get your clients’ tax right.
What we need you or your clients to do once we’ve spoken
- We will provide you with a list of your clients highlighting the potential discrepancies. This can be done by email once email protocol is agreed. Please review these clients’ returns and make a voluntary amendment to correct any mistakes. We won’t charge penalties for returns amended this way, but we will charge statutory interest on any tax not paid on time.
The deadline to amend these returns, is 31 January 2025.
- Then, email us a spreadsheet showing:
- Which returns you’ve amended
- Any returns you haven’t amended, and why.
If we don’t receive any voluntary amendments, we’ll review each case and take the relevant enquiry action.
We may also charge your clients a penalty on tax they owe.
How to contact us:
- Call us on the number at the top of this letter and quote the case reference CFSS-XXXXX
- Email us at [email address] – please first read the enclosed document, ‘Corresponding with HMRC by email’. Then confirm, in writing, that you and your clients:
- Understand and accept the risks of using email
- Are content for financial information to be sent by email
- Are content for us to send you attachments.
More information regarding enquiry action can be found at the following:
Go to GOV.UK and search:
- ‘Compliance checks’, for help and support
- ‘CC/FS7a’, for a factsheet about penalties for inaccuracies
- ‘CC/FS11’, for a factsheet about penalties for not telling us about something that affects your tax.
If you’ve spotted a tax anomaly that is producing an inequitable result or getting in the way of doing business, why not share it with the ICAS tax team?
