Good News on CIS Deductions

HMRC has revised its practice in relation to claims for refunds of construction industry scheme (CIS) deductions. What’s changed and how might this affect you?

HMRC has, for a long time, waged war with the construction industry on matters ranging from employment status to qualifying for gross payment status (GPS). However, earlier this year it began to soften its approach. There’s some especially good news for companies that don’t qualify for GPS and so have tax deducted from their income which falls into the construction industry scheme (CIS).

Companies can claim a refund of CIS deductions or use them to cover their tax liabilities e.g. corporation tax and VAT. In theory all that is necessary is to report to HMRC details of the deductions after the end of year tax year.  However, in the past, this often wasn’t as straightforward as it should have been.

HMRC won’t allow a refund or credit if your claim doesn’t tie up with its records. Until April 2016 HMRC refused point blank to give details of what CIS deductions were shown in its records. Instead it asked for copies of bank and other financial statements to prove the figure included in the claim.

You can now make a claim for a credit or refund of 2015/16 CIS deductions and if it’s at odds with HMRC’s records it will send you more information. This means that you are now able to identify any payments missing from HMRCS’s list and send it a copy of the corresponding deduction statements from the contractor along with a copy of your company banks statements.

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