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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
, see all updates

Deductions: credit and repayment: subcontractor claims for reimbursement to contractor

CISR72600 Action guide contents

If a contractor fails to make a deduction where they should have done, the Debt Management and Banking Office (DMB) may pursue the contractor for the sum which should have been deducted. The contractor may then ask the subcontractor to reimburse the sum which has been paid to, or is being sought by, the DMB.

Effect on subcontractor

In these circumstances, the subcontractor is likely to claim that they have suffered a deduction and that credit is due for that deduction.

This is not a standard claim under the Scheme because the deduction was not made under the provisions of the Scheme. It is therefore necessary to ensure that HMRC has actually received the sum at issue before any credit can be allowed to the subcontractor.

You may allow the credit if

  • you can confirm with the DMB Office that the deduction due has been paid by the contractor and that the contractor has withdrawn any related Regulation 9(3) or 9(4) claims


  • the subcontractor supplies you with evidence that they have reimbursed the contractor.

For repayment supplement purposes the deemed deduction should be treated as having been made in the year or accounting period in which the contractor was reimbursed.

Effect on contractor’s accounts

The contractor’s processing office should be advised not to allow any further deduction in the accounts for the money paid to the DMB in respect of the payment originally made gross to the subcontractor. Only the original payment will be due in computing the contractor’s profits (the subsequent payment will be offset by the subcontractor’s reimbursement).