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CIS adjustments

04 June 2013
Issue: 4405 / Categories: Forum & Feedback , Business

HMRC wish to have a subcontractor’s accounts adjusted so that the income and expenditure exactly matches the construction industry scheme returns

We received a notice from HMRC under TMA 1970 s 9A with regard to the 2012 tax return of a client who is a subcontractor. Various letters have gone back and forth with the result that the department want to adjust the income figure for the year to those shown on his contractors’ construction industry scheme (CIS) returns.

Similarly the amount claimed for subcontract labour would be as shown on the CIS returns that he has completed for the year. This ignores the profit and loss basis of computing the accounts and will virtually adjust them to an income and expenditure basis for the year.

Since HMRC have previously dictated that the “income and expenditure” basis should no longer be used it would appear to be setting a dangerous precedent to agree to these adjustments.

Do readers have experience of this and if so what...

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