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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Corporation Tax self-assessment (CTSA): the payment obligation: repayment of CIS25/SC60 tax

Companies that are:

  • subcontractors in the construction industry, and
  • not certificated under ICTA88/S561 (that is, only has a Registration Card),

are liable to suffer deductions under ICTA88/S559 (4) from payments made to them under contracts relating to construction operations.

Evidence of the amounts deducted is given on forms CIS25 (forms SC60, in the case of deductions suffered up to and including 31 July 1999).

The way in which companies can use these deductions will depend on when they suffered the deduction.

For deductions suffered before 6 April 2002

The deductions under Section 559 are not taken into account in arriving at the amount of the company’s SA under FA98/SCH18/PARA8 (see CTM93110).

However, the company takes them into consideration when arriving at the final amount payable. They can only be treated as CT paid in respect of the profits of the company’s trade, that is, only in respect of Case I profits. They cannot be set against the tax due from other sources, for example capital gains or non-trading loan relationships.

CIS companies indicate in their company tax return if there is an excess of CIS deductions that they want repaid. This is not a claim under FA98/SCH18/PARA57 or 58, because under TMA70/S59D any excess ‘relevant payments’ over liabilities must be repaid. Deductions under Section 559 form part of these ‘relevant payments’ so in strictness companies do not need to claim a repayment. But as the record of Section 559 deductions is not held on COTAX companies have to tell us of the amount(s) so that we can either set off or repay.

(For CTSA periods, a company cannot claim a repayment of CIS deductions under TMA70/S59DA, until the company delivers its return - see CTM92090.)

You can only make repayments of CIS25/SC60 tax manually. Before making any repayment, however, check that there are no other arrears of tax against which you can set the repayment, - RE3120+.

Repayments attract repayment interest under ICTA88/S826 (CTM92310 onwards) from the due date for the accounting period during which the relevant deductions were made. The due date is nine months and one day after the end of the accounting period.

For deductions suffered on or after 6 April 2002

For deductions suffered after 6 April 2002 CIS deductions are no longer ‘relevant payments’ and set against CT liabilities. CIS deductions can only be used to set against employer liabilities such as PAYE. They cannot be repaid to the company from COTAX. At the company’s request any reallocation from the employer/subcontractor record against CT must be handled as a reallocation into COTAX, or as a repayment set-off.