The Income Tax (Construction Industry Scheme) Regulations 2005
| Jurisdiction | UK Non-devolved |
| Citation | SI 2005/2045 |
| Year | 2005 |
2005 No. 2045
INCOME TAX
CORPORATION TAX
The Income Tax (Construction Industry Scheme) Regulations 2005
Made 25th July 2005
Laid before the House of Commons 25th July 2005
Coming into force in accordance with regulation 1
The Commissioners for Her Majesty’s Revenue and Customs1, in exercise of the powers conferred upon them by section 205 of the Finance Act 20032, sections 60(7), 62(3), (6) and (7), 63(1), 65(2), 66(2) and (9), 68, 69, 70, 71, 73 and 75 of, and paragraphs 2, 3(1) and (3), 4(3) and (5), 6, 7(1) and (3), 8(2), 10, 11(1) and (4), 12(2), 15 and 16 of Schedule 11 to the Finance Act 20043and sections 98A(1) and 113(1) of the Taxes Management Act 19704, make the following Regulations:
PART 1
INTRODUCTION
Citation and commencement
1. These Regulations may be cited as the Income Tax (Construction Industry Scheme) Regulations 2005 and shall come into force on such day as may be appointed by the Commissioners for Her Majesty’s Revenue and Customs by notice in the London, Edinburgh and Belfast Gazettes (“the appointed day”).
Interpretation
2. In these Regulations—
“the Act” means the Finance Act 2004;
“approved method of electronic communications”, in relation to the delivery of information or the making of a payment in accordance with a provision of these Regulations, means a method of electronic communications which has been approved, by specific or general directions issued by the Commissioners for Her Majesty’s Revenue and Customs, for the delivery of information of that kind or the making of a payment of that kind under that provision;
“contract payment” has the meaning given in section 60 of the Act;
“contractor” has the meaning given in section 57 of the Act;
“construction contract” has the meaning given in section 57 of the Act;
“construction operations” has the meaning given in section 74 of the Act;
“electronic communications” has the meaning given in section 132(10) of the Finance Act 19995;
“employer reference” means the combination of letters, numbers or both used by Her Majesty’s Revenue and Customs to identify an employer for the purpose of the Income Tax (Pay As You Earn) Regulations 20036;
“ICTA” means the Income and Corporation Taxes Act 1988;
“ITEPA” means the Income Tax (Earnings and Pensions) Act 20037;
“notice” means notice in writing;
“PAYE Regulations” means the Income Tax (Pay As You Earn) Regulations 2003;
“sub-contractor” has the meaning given in section 58 of the Act;
“tax appeal Commissioners” means the General Commissioners or Special Commissioners as the case may be;
“tax month” means the period beginning on the 6th day of a calendar month and ending on the 5th day of the following calendar month;
“tax year” means a year for which any Act provides for income tax to be charged;
“tax period” means—
(a) tax quarter if regulation 8 (quarterly tax periods) applies, or
(b) tax month, in every other case;
“tax quarter” means any of the following (inclusive) periods—
6th April to 5th July,
6th July to 5th October,
6th October to 5th January, and
6th January to 5th April;
“TMA” means the Taxes Management Act 19708;
PART 2
CONTRACTORS
Multiple contractors
3.—(1) A contractor may elect, for the purposes of these Regulations, to be treated as different contractors in relation to different groups of sub-contractors.
(2) Where the contractor makes an election these Regulations apply as if—
(a)
(a) in respect of each group the contractor were a different contractor; and
(b)
(b) each group constituted all the sub-contractors to whom the contractor makes payments under contracts relating to construction operations.
(3) While an election is in force, a contractor must allocate any new sub-contractors to one of the groups.
(4) An election must be made by notice to an officer of Revenue and Customs containing—
(a)
(a) such information as may be necessary to identify the groups of sub-contractors, and
(b)
(b) a certificate that the contractor makes no payments under contracts relating to construction operations other than to sub-contractors in the groups so identified.
(5) A contractor must, subject to paragraph (6), make an election before the beginning of the tax year for which it is to have effect.
(6) A contractor who acquires the whole or part of any business of another contractor may, within 90 days of the acquisition, elect—
(a)
(a) to be treated as a different contractor in relation to the acquired sub-contractors, or two or more different contractors in relation to groups of the acquired sub-contractors, whether or not an election is already in force in respect of the existing sub-contractors, or
(b)
(b) to add some or all of the acquired sub-contractors to existing groups of sub-contractors in respect of whom an election is already in force,
and such election has effect for the tax year in which the acquisition takes place.
(7) In paragraph (6)—
“business” includes any trade, concern or undertaking;
“acquired sub-contractor” means a sub-contractor who contracted with the acquired business.
(8) An election continues in effect until revoked by notice given to an officer of Revenue and Customs.
(9) A notice of revocation must be given before the beginning of the tax year for which the election is to be revoked, but the revocation of an election does not prevent the making of a new election for that or a later tax year.
(10) An election which has not yet come into effect may be revoked at any time before the beginning of the tax year for which it is to have effect.
Monthly return
4.—(1) A return must be made to the Commissioners for Her Majesty’s Revenue and Customs in a document or format provided or approved by the Commissioners—
(a)
(a) not later than 14 days after the end of every tax month, by a contractor making contract payments or payments which would be contract payments but for section 60(4) of the Act (contract payments: exceptions), and
(b)
(b) not later than 14 days after the end of the tax month following the appointed day, by a contractor who has made a payment in the 12 months preceding the appointed day which would be a contract payment or a payment which would be a contract payment but for section 60(4) of the Act if made after the appointed day.
(2) The return under paragraph (1) must contain the following information—
(a)
(a) the contractor’s name,
(b)
(b) the contractor’s unique taxpayer reference (UTR) and Accounts' Office reference,
(c)
(c) the tax month to which the return relates, and
(d)
(d) in respect of each sub-contractor to whom, or to whose nominee, payments under construction contracts were made by the contractor during that month,—
(i) the sub-contractor’s name;
(ii) the sub-contractor’s national insurance number (NINO) or company registration number (CRN), if known; and
(iii) the information specified in paragraph (3).
(3) The information specified is—
(a)
(a) if the sub-contractor is registered for gross payment—
(i) the sub-contractor’s unique taxpayer reference (UTR), and
(ii) the total amount of payments which would be contract payments but for section 60(4) of the Act (contract payments: exceptions) made by the contractor to the sub-contractor during the tax month;
(b)
(b) if the sub-contractor is registered for payment under deduction—
(i) the sub-contractor’s unique taxpayer reference (UTR),
(ii) the total amount of contract payments made by the contractor to the sub-contractor during the tax month,
(iii) the total amount included in those payments which the contractor is satisfied represents the direct cost to any person other than the contractor of materials used or to be used in carrying out the construction contract to which the contract payment relates, and
(iv) the total amount deducted from the payments mentioned in paragraph (3)(b)(ii) under section 61 of the Act (deduction on account of tax from contract payments);
(c)
(c) if the sub-contractor is not registered for gross payment or payment under deduction—
(i) the sub-contractor’s unique taxpayer reference (UTR), if known,
(ii) the total amount of contract payments made by the contractor to the sub-contractor during the tax month,
(iii) the total amount included in those payments which the contractor is satisfied represents the direct cost to any person other than the contractor of materials used or to be used in carrying out the construction contract to which the contract payment relates,
(iv) the total amount deducted from the payments mentioned in paragraph (3)(c)(ii) under section 61 of the Act, and
(v) the verification reference for higher rate deduction.
(4) The return may be transmitted electronically to the Commissioners for Her Majesty’s Revenue and Customs.
(5) The return must include a declaration by the person making the return—
(a)
(a) that none of the contracts to which the return relates is a contract of employment;
(b)
(b) indicating whether he has complied with the requirements of regulation 6 (verification etc of registration status of sub-contractor) in the case of each person to whom a payment to which the return relates is made; and
(c)
(c) that the return contains all the information, particulars and supporting information required by this regulation to be included in the return, and such information, particulars and supporting information are complete and accurate to the best of the contractor’s knowledge and belief.
(6) If the return is not transmitted electronically, it must be signed by the contractor or a person duly authorised by the contractor to make the return.
(7) The contractor must make and keep such records as will enable him to comply with this regulation.
(8) The contractor must give the following information in writing to the sub-contractor to whom it relates not later than 14 days after the end of the tax month either in respect of the...
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