CIS repayments: top 11 tips (2024)

What do you need to know about the Construction industry scheme (CIS)?

As per (CIS) laws, contractors have to deduct advance payments in the form of taxes and NIC from subcontractor’s income and then pass it to HM Revenue & Customs. It is necessary for contractors to register under CIS whilst subcontractors are not required to register. Sub-contractors may be liable to a higher deduction rate, only if they are not registered with HMRC.

How do you qualify as a contractor or sub-contractor?

You are eligible to register as a contractor if:

• You pay subcontractors for construction work
• You spend more than £1 million a year in a period of 3 years on construction that is not for business purposes. This condition applies if your business does not comprise of construction work

You are eligible to register as a subcontractor if:

• You are involved in the construction business working under a contractor

You may be eligible to register as both if you fall under both of the categories above. If you are not sure if you are eligible or how to register, speak to a competitive accountant, accounting firm, tax accountant or contractor accountants.

How can your company make repayment claims under the Construction Industry Scheme (CIS)?
In order to help companies who are trying to make repayment claims under CIS, we have curated 11 important tips for you.

Tip 1: You need to make sure that the repayment claim under CIS is made by an authorized PAYE agent of your company. You can download form 64-8 ( form 64-8 authorizes HMRC to discuss and disclose your tax information with your agents) from HMRC’s website and send it to National Insurance Contributions & Employers Office, HMRC. You may utilise the online authorization services as well.

Tip 2: You need to correctly state your UTR (Unique Taxpayer Reference) and your subcontractor details on all of the documents. Make sure you proofread the names twice.

Tip 3: Ensure that you submit your company’s payment and deduction statement for the relevant time period (6th April current year to the 5th April next year) as per HMRC’s requirements, to be able to have your claim processed.

Tip 4: Make sure that your company’s claim for repayment, is only for deductions taken from the payments during the period in which you incorporated the company and not before the year of incorporation.

Tip 5: Double check that correct CIS deductions (taken from your company’s subcontractor) are reported on the monthly returns. Contractor accountants specialise at processing CIS returns on time, speak to a tax accountant if you have not already appointed one.

Tip 6: Ensure that as a contractor working under CIS, your company has no due returns. (consult form CIS300)

Tip 7: Make sure that you have submitted the Final Employer Payment Summary (EPS) and the Full Payment Submissions (FPS) already.

Tip 8: You have to submit information as per HMRC’s requirement within a specified timeframe, for instance, the ‘CIS Suffered Letter’ received by HMRC should include the information requested by HMRC.

Tip 9: If there are over-payments that don’t fall under CIS, you have to prove how these payments have risen by sending supporting documents and evidence, along with your company’s repayment claim to HMRC. If you are unsure on how to do this, ask your tax accountant to do this for you instead.

Tip 10: You need to send in all the pending returns for the subcontractors if your company stops trading.

Tip 11: CIS can get confusing, hire expert contractor accountants, or, look for an accountant or an accounting firm nearby which can help you process CIS returns and payments.

How to reclaim a repayment of CIS deductions online:

-Limited companies can reclaim a repayment of CIS deductions online if too many taxes or NIC have been submitted by using the ‘CIS repayment i-form’, this was introduced by HMRC in 2017.

-To access the form, you must have a government gateway ID.

-Log in to your government gateway account.

Important points to remember:

-If you are making a written claim, do mention your PAYE reference and include the word ‘CIS’ in your letter to make sure it gets to the relevant department before you send it to National Insurance Contributions & Employer office, HM revenue & customs.

-If HMRC makes repayments through BACS, you have to send your company’s bank account details along with the claim.

-You can request HMRC to make repayment claims against a corporation tax or VAT liability.

Clear House Accountants are specialist Accountants in London, our in-house team of contractor accountants are trained to be able to understand all matters related to contractors. They will create bespoke smart solutions to all your compliance and business-related problems while ensuring all compliance tasks are done on time and effectively.

Anam Rehman

Director Operations & Finance

+44 (0)207 117 2639

info@chacc.co.uk

chacc.co.uk

Author Bio

Anam has a degree in accounting from the Prestigious St John’s University, and works as a senior director in Clear House.

Before working in Clear House, Anam worked in various commercial roles, the last one being the VP Operations for a prestigious business organisation,working on improving the organisation’s operational efficiency, growth and high level client management.

Anam manages clients ranging from software companies to large property developers and managers. Notably, she recently worked with a large property development company building large scale developments in London and the surrounding area.

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