Deductions: checking of deductions: examination of payment and deduction statements received from subcontractor
This action guide explains the steps you should take when you receive a payment and deduction statement (PDS) from a subcontractor.
- Examine the PDS to establish whether it is acceptable.
The information panel at CISR72060 contains detail on what might make a PDS unacceptable.
If you decide there is anything suspicious
- refer it using the RIS/CIS Referral stencil for consideration.
If it is part of an application for an in-year repayment under SA, you should check the PDS as described in the action guide at CISR73620 and then follow the guidance on in-year repayments (See CISR75030) in the section on SA subcontractors.
If it is an SA claim for credit against pre-SA arrears, you should check the PDS as described in the action guide in this section at CISR73630, and then follow the guidance on credit against arrears (See CISR75060) in the section on SA subcontractors.
From 6 April 2002, subcontractor companies having deductions made from their payments can set off these deductions against the monthly or quarterly payments due for PAYE/NIC, and any CIS deductions they made from payments to their own subcontractors.
For non RTI years
Where the company acts as a contractor, at the end of the tax year, following receipt of the company’s P35 and their CIS monthly returns, any excess CIS deductions which could not be set-off against PAYE liabilities was refunded or set against other liabilities.
For RTI years
Where the company acts as a contractor, at the end of the tax year, following receipt of their monthly Full Payment Submission (FPS) and Employer Payment Summary (EPS) returns and their CIS monthly returns for the tax year, any excess CIS deductions which cannot be set-off against PAYE liabilities may be refunded or set against other liabilities.
Refer to CISR76020 for more details of the procedure for allowing credit for company CIS deductions.
If a PDS is submitted along with a CTSA or SA return, you should follow the guidance in the relevant manual concerning the examination of those returns. If the PDS has been submitted with no explanation or return you should establish with the subcontractor the purpose of its submission.