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HMRC internal manual

Construction Industry Scheme Reform Manual

Deductions: credit and repayment: credit claimed where no deduction made

CISR72600 Action guide contents

A subcontractor may only claim credit for CIS deductions actually made.

A subcontractor who is due to be paid under deduction at the standard or higher rate of deduction by a contractor, but is actually paid gross, cannot be given credit for the sum the contractor should have deducted even if the contractor subsequently pays this to HMRC.

This is because FA04/S62 (2) refers to the ‘sum deducted’ being treated as being income tax paid in respect of the subcontractor’s relevant profits. If no amount has been ‘deducted’, there is nothing that can be applied in the way described in this provision.

If it appears that the subcontractor is trying to claim credit for an amount, which the contractor should have deducted, rather than an amount that actually was deducted you should explain to them that no credit is due because no deduction was made.

You should notify the contractor’s Employers Section where it appears that the contractor should have made a deduction but has failed to do so. The Employers Section should examine the case and consider making a report using the RIS/CIS Referral stencil, if appropriate.