53.11 This Clause 53.11 relates to the Construction Industry Tax Deduction Scheme:
(a) In this Clause 53.11 (but not otherwise):
(i) "the Act" means the Finance Act 2004;
(ii) "the Regulations" means the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045);
(iii) "Contractor" means a person who is a contractor for the purposes of Chapter 3 Part 3 of the Act; and
(iv) "sub-contractor" means a person who is a sub-contractor for the purposes of Chapter 3 Part 3 of the Act.
(b) each of the Board and Project Co shall comply with Chapter 3 Part 3 of the Act and the Regulations.
(c) if any payment due from the Board to Project Co under this Agreement is a contract payment under section 60(1) of the Act, then the Board, 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.
(d) if any payment due from the Board to Project Co under this Agreement is a contract payment under section 60(1) of the Act, then:
(i) if Project Co is registered for gross payment under section 63(2) of the Act, the Board shall make a payment to Project Co without any deduction;
(ii) if Project Co is not registered for gross payments under section 63(2) of the Act, the Board shall make a payment to Project Co, subject to the deduction of the relevant percentage in accordance with section 61(1) of the Act, and thereupon Clause 53.11(f) below shall apply;
(e) if any dispute arises between the Board and Project Co as to whether any payment due by the Board to Project Co 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 53.11(a) to 53.11(f) shall apply accordingly;
(f) the Board 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 Project Co (and not just that part of such payment which does not represent the direct cost to Project Co 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 Board shall have received written confirmation from HM Revenue and Customs (obtained by and at the expense of Project Co) in a form which is reasonably satisfactory to the Board directing the Board to make the deduction against only a specified amount or proportion of any such payment to Project Co;
(g) where any error or omission has occurred in calculating or making any payment under this Clause 53.11 then:
(i) in the case of an over deduction, the Board shall correct that error by repayment of the sum over deducted to Project Co; and
(ii) in the case of an under deduction, Project Co shall correct that error or omission by repayment of the sum under deducted to the Board; and
(h) if compliance with this Clause 53.11 involves the Board or Project Co in not complying with any other of the terms of this Agreement, then the provisions of this Clause shall prevail.
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158 Boards' legal advisers should ensure that this drafting is up to date at the time that the Project Agreement is signed.