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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
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Deductions: Company CIS deductions claimed against PAYE liability but payments recorded against another subcontractor’s record(s) - Introduction

CISR77600 Action guide contents

Some companies may have submitted form P35 (for non-RTI years) at the year-end, or Employer Payment Summary (EPS) returns (for RTI years) showing that CIS deductions made from the company’s income as a subcontractor have been set off against the company’s PAYE liabilities. However, on checking the payment situation in CIS, you may find that some or all of the CIS deductions set off against the company’s PAYE liabilities have been recorded against the personal CIS record of one of the company’s directors, or against a partnership of which the director was/is a partner.

There may be various reasons why this has happened but often it is because:

  • the initial contract was between the contractor and the company’s director in his/her own right as a sole-trader or as a partner in a firm,
  • the sole-trader or partnership subsequently formed the limited company to continue the work (or decided to switch the work to an existing company of which the sole-trader / partner was already a director), and then


  • the sole-trader or partnership failed to tell the contractor about the limited company, or
  • the contractor continued in error to make payments using the UTR and details of the sole-trader or partnership, (having also failed to verify the company) even though the contractor was aware that the contract was now with the limited company.

These cases will be identified to you from the ‘Post Capture Work List’ in EBS or in day to day work. The procedure that you will need to take to resolve these cases is described in the Action Guides as follows:

  • Initial action by the Employer Section - CISR77610 
  • Action by the SA Processing office - CISR77620 


Usually the company director with whom you will be in contact on this matter, whether on the Employer section or in the SA processing office, is the sole-trader or partner against whose CIS record the payments are now recorded. In such cases it is permissible to discuss the matter with that director. However, you must take great care to ensure that you do not ever discuss CIS deductions with anyone other than the customer named on the payment and deduction statements. This means that you cannot discuss this matter with any other directors or officers of the company.