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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: CIS: timeline of events

  • On the 19th of each month, the contractor must submit the monthly returns.
  • On or around the 29th of each month, ETMP will issue penalty notices following the CIS computer system sending:
    • details of returns that were filed late or are still outstanding to ETMP for the issue of a penalty as appropriate
    • a work item to IDMS for each return outstanding.
  • 30 days from issue of penalty notice, ETMP will pass a work item to IDMS for each penalty still outstanding.
  • As and when necessary, Local compliance can issue penalty charges manually.

Paying deductions of tax

Deductions made from subcontractors are accounted for under PAYE on ETMP. Payment in any tax month must reach us by:

  • for monthly payers, the 19th following the tax month to which the reductions relate, or by the 22nd where payments are made electronically
  • for quarterly payers within 14 days of either:

    • the quarter end
    • 17 days if paid electronically.

Limited companies with deductions made from payments to them as a subcontractor (CIS deductions suffered) may set the deductions against the companies’ in-year liabilities for PAYE and NIC and any CIS deductions it is due to pay over to us. If this results in no PAYE liability remaining due, the customer must submit a PAYE nil declaration.

To claim CIS-suffered deductions they must complete an Employment Payment Summary (EPS). The credit claimed will automatically be set against the liability for the month. If the liability is larger than the credit, the company must pay the balance by the due date. Any excess credit will be used to clear any underpayments on the tax year. If there are no underpayments, the credit can be used for a future month on the tax year. Credit cannot be used for another tax year or head of duty without verification by PT Ops. If you need to have a credit verified, send an eForm to ‘NICEO PAYEmp CIS’.

Locked CIS credits

CIS deductions suffered by a limited company are reported on an EPS and are offset against the company’s PAYE/CIS liabilities for the year to date, with any excess CIS deductions being carried forward each month until the end of the tax year. At the end of the tax year (normally between 2 and 5 May) any CIS deductions suffered claimed on an EPS is automatically locked with clearing lock ’C’ (clearing lock type can be seen on the Set/Unset lock screen). This is to prevent the excess credit automatically allocating to charges for the following tax year. Any excess CIS deductions suffered remaining at the end of the tax year can be claimed as a repayment or reallocated if the:

  • final RTI return has been submitted
  • company has paid all PAYE/CIS amounts due to HMRC for the year.

There will be, however, some cases with CIS credit that has been locked and a PAYE/CIS charge outstanding within the same tax year.

Action to take

Where you identify that credit for CIS deductions has been locked and there is a debt outstanding within the same tax year you should review notes on ETMP to ensure that there is no action being taken regarding the CIS overpayment by PT Ops and that it has not already been actioned by another DM office. If PT Ops are already involved in the case, then do not use the credit.

Where there is no evidence of PT Ops or DM activity:

  • unlock the credit in set/unset locks – see the Setting and unsetting locks (PDF 868kb) ETMP helpcard
  • allocate the CIS credit to the outstanding PAYE/CIS charges – see ETMP Helpcard 12 Allocate a Payment to a Charge (public folder)
  • lock any excess CIS credit using clearing lock ‘C’ - see the Setting and unsetting locks (PDF 868kb) ETMP helpcard
  • make a clear note on ETMP and IDMS of the actions taken.

Under no circumstances should any CIS credit be allocated outside of the tax year it is intended for. Any excess credits will need to be verified by PT Operations who will arrange any necessary reallocations across tax years, allocation to the AMC account or to other HODs.

If you are in contact with the employer and they want the credit to be reallocated or request repayment they should be instructed to put the request in writing to the following address.

NIC&EO
HM Revenue and Customs
BX9 1BX

If you receive a letter from the customer requesting reallocation or repayment of this credit, forward the letter to:

Customer Operations Employer Office
BP4102
Chillingham House
Benton Park View
Newcastle
NE98 1ZZ

If you have an underpayment and are unable to contact the customer or the customer does not contact PT Ops to request the reallocation, then check CISR to see if credit is available:

Enter the employer’s COTAX UTR and select the subcontractor option.

  • click on ‘View Customer’
  • click on the ‘Designatory Details’ button at the bottom of the screen
  • click on the ‘Payment details’ tab at the top
  • ensure you have the correct period entered for the year of the credit (06/04/xx – 05/04/xx) and click ‘filter’
  • the’ total deducted’ line will give you the figure deducted from the employer.

If:

  • extra credit is available (in other words, the full amount shown on CISR has not already been used to clear existing charges) send an eForm to ‘NICEO PAYEmp CIS’ asking them to verify the CIS credit and advising where it needs reallocation to
  • no extra credit is available, ensure IDMS is noted fully and pursue the underpayment.