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HMRC internal manual

Construction Industry Scheme Reform Manual

Deductions: CTSA subcontractors: introduction

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 CIS deductions suffered by companies.

Specific subjects covered include the following

  • allowing credit against liability for PAYE/NIC (From 6 April 2002)
  • dealing with claims made with Company Tax Returns
  • checking CIS deductions on CIS300 monthly returns
  • repayments.

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, the treatment of deductions suffered by sole traders and partners is also covered under the same section.


Company subcontractors that are not registered for gross payment status have deductions made from their payments under FA04/s61. FA04/s62 (3) says that such deductions shall be treated as paid on account of any relevant liabilities of the subcontractor. This generally means any liabilities of the subcontractor as a contractor for payment to HMRC of PAYE/NICs, CIS Deductions or Student Loans. If there is still an amount left after settling these liabilities, the excess may be treated as being corporation tax paid in respect of the subcontractor company’s profits. An excess of credit over total liability can be repaid.

In this section ‘credit’ can be taken to mean either credit by way of set-off, or excess credit being repaid, unless otherwise specified.