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HMRC internal manual

Construction Industry Scheme Reform Manual

Deductions: SA subcontractors: introduction

CISR75600 Action guide contents

Deductions and Subcontractors

This paragraph serves as an introductory overview of the section. For more detailed coverage of particular processes, use the above links to action guides or information panels.

The section covers the processes involved in dealing with claims to credit or repayment for deductions suffered by sole traders and partners, it does not cover repayment for deductions suffered by companies. For company subcontractors please see the instructions commencing at CISR76000. It covers the period from receipt of a claim to the application of the credit, the making of the repayment or the refusal of the claim.

Specific processes covered include the following

  • dealing with claims made in an SA return
  • dealing with in-year repayment claims
  • dealing with credit arising to bankrupts

For coverage of the general principles of the deduction and claims to credit procedures see the section at CISR70000 onwards. That section also deals with less routine cases.

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Self Assessment subcontractors who are not registered for gross payment status have deductions made from their payments under FA04/s61 on account of the tax and Class 4 NIC payable on their trading profits. FA04/s62(2) says that such deductions shall be treated as being Income Tax paid against the subcontractor’s own tax liability. The legislation does not specify any particular order of set-off. Credit is normally given first against the tax (and Class 4 NIC liability, if any) due for the year or accounting period in which the deductions were made. An excess of credit over liability can lead to repayment.

Throughout this chapter ‘credit’ can be taken to mean either credit by way of set-off, against established liabilities under SA or excess credit being repaid, unless otherwise specified.

CIS deductions made from payments received in the current tax year cannot be used against any SA year Payments on Account or Balancing Charges. See CISR75060 for more information.

In-year repayments can be used for Payments on Account or Balancing Charges, because they are treated as cash.