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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: contractors: subcontractor's payment and deduction statement

Payment and deduction statement

Under the new Scheme, from 6 April 2007, CIS vouchers no longer exist. Instead, SI2005/2045 reg 4(8), requires a contractor to give to certain subcontractors a statement showing the amounts paid and the deductions made from those payments.

This payment and deduction statement (PDS) must be given to every subcontractor from whom a deduction has been made under the Scheme, regardless of whether the deduction was at the standard or higher rate. Contractors paying subcontractors, from whom deductions are not required to be made, do not have to give those subcontractors a payment and deduction statement, though they may if they so choose.

Frequency of issue

The PDS must be issued to the subcontractor within 14 days after the end of the tax month to which it relates. It may cover all payments made to the subcontractor, within the tax month, or it may be issued on a payment by payment basis - as long as a minimum of one payment statement is issued each tax month.

Information on the statement

Contractors may choose the style of the payment and deduction statement but it must include at least the following items of information:-

  • Contractor’s name and employer’s tax reference
  • The end date of the tax month in which the payment was made (for example, ‘Tax month ending 5 June 2007’)
  • The following details about the subcontractor

    • name
    • UTR
    • personal verification number (but only if the subcontractor could not be verified and a deduction at the higher rate has been applied)
    • the gross amount of the payment made to the subcontractor
    • the cost of any materials that has reduced the amount upon which the deduction has been applied
    • the amount of the deduction.

How do contractors give subcontractors a payment and deduction statement?

The PDS must be issued to the subcontractor, in writing, including by fax. The contractor can also issue the subcontractor’s payment and deduction statement electronically, that is, by email, but only where

  • the contractor and subcontractor agree to this method, and
  • the statement is in a form that allows the subcontractor to save and print it.

An example of how a PDS might look is shown at Appendix E of booklet CIS340 - ‘Construction Industry Scheme. Guide for contractors and subcontractors’. A pdf document of a PDS is also available from this manual at CISR96020 or from the GOV.UK website