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The provision of payment and deduction details to subcontractors and their agents has become a growing problem for HMRC and subsequently, they have confirmed that they will no longer provide this information on a bulk basis.

For a number of reasons, historically, some smaller subcontractors have often failed to keep the records of payments given to them by contractors perhaps because they have lost them or otherwise destroyed them. In addition, some contractors fail to give their subcontractors the required payment and deduction statements. If the subcontractor has not kept any other business records, the loss, or non-receipt, of the necessary payment and deduction statements can cause difficulties. This is because when it comes to the completion of their annual tax return, they do not have a full record of their earnings and receipts.

Subcontractors who believe they do not have a complete record of their payments and deductions at the year-end tend to contact HMRC for help. Typically, these subcontractors ask HMRC to give back to them details of their payments and deductions as reported on the returns of contractors for whom they have worked during the period, or year, in question. HMRC are often able to help out with this information where the subcontractor clearly has a genuine need for it. However, providing details of all payments and deductions reported on contractors’ returns can cause problems. HMRC cannot know at all times which contractors a subcontractor may have worked for nor can they ever be fully aware of what payments and deductions may have been made by any particular contractor. This is because the information held by HMRC is only as good as the information that contractors have returned. Although contractors are under a legal obligation to report this information to HMRC on a monthly basis, there have been occasions where a contractor’s monthly return has not been accurate, complete or even received by HMRC in the first place. Subcontractors that rely on this information as a complete record in order to complete their own tax returns run the serious risk that they are making an incorrect or incomplete return and could be making themselves liable to a penalty for doing so.

Over recent years, the provision of subcontractor payment and deduction details to subcontractors has become a growing problem with many subcontractors and some agents seeking to obtain this information from HMRC rather than keep their own records. This has led, in a number of instances, to excessive demands being placed on HMRC’s resources when requests have been made for payment details for scores of subcontractors at a time.
The HMRC CIS computer system was designed for HMRC staff to access information on a subcontractor by subcontractor basis in their normal day to day work. It was never intended to supply long lists of payments in paper form to subcontractors and their agents.

One of the aims of new CIS was to improve subcontractors’ compliance with their tax obligations. Continuing to provide this information, on demand, would simply condone the subcontractors’ failure to meet their obligations.

In order to stem the ever rising number of time and resource-intensive, multiple and bulk requests for data that HMRC are receiving, the Department will no longer be able to provide this information on a bulk basis.

Requests for missing details from individual subcontractors or their agents will continue to be provided when they can demonstrate that they have been back to the contractor concerned to request a duplicate or missing payment and deduction statement but have failed to obtain one. In cases where it is alleged that a contractor has refused to issue one or more original payment and deduction statements, HMRC will require the subcontractor or their agent to give details of the contractor so that further enquiries may be made.

Once HMRC are satisfied that a subcontractor has tried to obtain details of the missing payment and deduction statement, they will supply the missing information if they possibly can and, of course, where the information is currently held on the HMRC CIS system.

HMRC won’t, however, automatically be able to provide lists of all payments and deductions covering a full tax year.