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HMRC internal manual

Construction Industry Scheme Reform Manual

Deductions: checking of deductions: examination of payment and deduction statement received from subcontractor

CISR73600 Action guide contents


The Payment and Deduction Statement (PDS) is the subcontractor’s receipt from the contractor showing how much has been paid and how much has been deducted from the payments. The PDS cannot generally be used on its own to support repayment claims which must be based on the subcontractor’s SA return or on forms CIS40 and CIS41 where the claim is a formal in-year repayment claim.

Submission of payment and deduction statements

Subcontractors can submit PDS’s for any of the following purposes

  • to support a claim for in-year repayments for SA subcontractors
  • to claim year credit to set off against earlier years’ arrears in some cases
  • to claim repayment in non-standard cases
  • to claim credit or repayment with SA returns
  • to claim credit or repayment in support of an entry made at box 30 of form P35 for non RTI years (Companies only)
  • to claim credit or repayment in support of entries made on Employer Payment Summary (EPS) returns for RTI years (Companies only)

Detailed guidelines for dealing with repayment claims in SA returns are contained in the Self Assessment Manual (SAM) from SAM110000.

Guidance for dealing with CIS repayment claims for Companies can be found in the PAYE Manual at PAYE53012 and PAYE53013.

In all cases of in-year repayment claims and claims to set current year credit against earlier years’ arrears you must check the PDS’s as set out in the action guide (see CISR73620).

Requirements of the payment and deduction statement

The Payment and Deduction Statement (PDS) may be in any style the contractor chooses but it must contain certain information and be in writing. See CISR72060 for further details of information that must be shown on the PDS.

The PDS can also be issued electronically to the subcontractor (where both parties agree to this method) and it is in a form that allows the subcontractor to store and print it.

A blank copy of the PDS for use by Contractors (if they wish) is available from the HMRC website at

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Unacceptable payment and deduction statements

As the PDS is not a form which is generated by HMRC, but by the contractor it is more difficult to specify what features will deem a PDS to be unacceptable.

The following however are features you should look for when examining a PDS

  • Are there any alterations to the names or amounts shown on the form?

Documents that are in any way suspicious need to be referred using the RIS/CIS Referral stencil.

  • Is it a photocopy?

Photocopied PDS’s may be accepted with SA returns or repayment claims where the subcontractor has lost the original PDS and obtained a photocopy from the contractor. It should clearly be marked “Duplicate” to avoid any confusion with the missing PDS if it is later found.

  • You should be aware of the possibility of duplicate claims using photocopies, or fraudulent claims where the original PDS has been tampered with before photocopying. So where a photocopy is submitted, it is very important that you check the PDS. Where credit has already been claimed for the deduction, or the figures have been altered, refer the case using the RIS/CIS referral stencil.

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Guidance on detecting fraud in repayment cases involving PDS’s is contained in booklet R400 available to RALOs.

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Security checks

A security check is carried out periodically in each Area to reduce the risk of internal or external fraud against the department.