35.10 This Clause 35.10 (Construction Industry Tax Deduction Scheme) relates to the Construction Industry Tax Deduction Scheme:
35.10.1 In this Clause 35.10 (Construction Industry Tax Deduction Scheme) (but not otherwise):
(a) "the Act" means the Finance Act 2004;
(b) "the Regulations" means the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045);
(c) "the Legislation" means Chapter 3 Part 3 of the Act and the Regulations, taken together;
(d) "Contractor" means a person who is a contractor for the purposes of Chapter 3 Part 3 of the Act; and
(e) "sub-contractor" means a person who is a sub-contractor for the purposes of Chapter 3 Part 3 of the Act.
35.10.2 Each of the Authority and Sub-hubco shall comply with the Legislation.
35.10.3 If any payment due from the Authority to Sub-hubco under this Agreement is a contract payment under section 60(1) of the Act, then the Authority, as Contractor, shall (not later than fifteen (15) Business days before the first such payment is due to be made) verify, in accordance with paragraph 6 of the Regulations, whether the sub-contractor is registered for gross payment or for payment under deduction or is not registered under Chapter 3 Part 3 of the Act.
35.10.4 If any payment due from the Authority to Sub-hubco under this Agreement is a contract payment under section 60(1) of the Act, then:
(a) if Sub-hubco is registered for gross payment under section 63(2) of the Act, the Authority shall make a payment to Sub-hubco without any deduction;
(b) if Sub-hubco is not registered for gross payments under section 63(2) of the Act, the Authority shall make a payment to Sub-hubco, subject to the deduction of the relevant percentage in accordance with section 61(1) of the Act, and thereupon Clause 35.10.6 below shall apply.
35.10.5 If any dispute arises between the Authority and Sub-hubco as to whether any payment due by the Authority to Sub-hubco under this Agreement is or is not a contract payment by virtue of the exemption in Regulation 23 of the Regulations, the parties will jointly apply to HM Revenue and Customs for a written ruling and until such ruling is received it shall be assumed that such payment is a contract payment and the provisions of Clause 35.10 (Construction Industry Tax Deduction Scheme) shall apply accordingly.
35.10.6 The Authority shall be entitled to make a deduction at the rate specified in section 61(1) of the Act or at such other rate as may be in force from time to time from the whole of any payment to Sub-hubco (and not just that part of such payment which does not represent the direct cost to Sub-hubco or any other person of materials used or to be used in carrying out the construction operations to which the relevant payment relates) unless prior to making such payment the Authority shall have received written confirmation from HM Revenue and Customs (obtained by and at the expense of Sub-hubco) in a form which is reasonably satisfactory to the Authority directing the Authority to make the deduction against only a specified amount or proportion of any such payment to Sub-hubco.
35.10.7 Where any error or omission has occurred in calculating or making any payment under this Clause 35.10 (Construction Industry Tax Deduction Scheme) then:
(a) in the case of an over deduction, the Authority shall correct that error by repayment of the sum over deducted to Sub-hubco; and
(b) in the case of an under deduction, Sub-hubco shall correct that error or omission by repayment of the sum under deducted to the Authority.
35.10.8 The Authority shall send promptly to H M Revenue & Customs any returns required by the Legislation, and shall provide to Sub-hubco a payment statement (where appropriate) and/or such other information as may be required by the Legislation in relation to any contract payment.
35.10.9 If compliance with this Clause 35.10 involves the Authority or Sub-hubco in not complying with any other of the terms of this Agreement, then the provisions of this Clause shall prevail.