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HMRC internal manual

PAYE Manual

Employer returns: Enterprise Tax Management Platform (ETMP): checking CIS deductions suffered 2012-13 onwards for RTI employers (Action Guide)

To deal with work items relating to CIS deductions suffered, for the years 2012-13 onwards for RTI employers, follow steps 1 - 13 below.

To deal with a work items on the CIS Deductions Advisory (years 2002-03 to 2003-04) or Post Capture work lists (years 2004-05 to 2006-07) see PAYE53011. To deal with work items on the ‘Post Capture’ work list (2007-2008 onwards non RTI Employers) see PAYE53012.

This guide is presented as follows

Step 1

Steps 2 - 4

Steps 5 - 7

Step 8

Step 9

Step 10

Step 11

Step 12

Step 13

 

For details of how to access any of the Employer Business Service functions, use PAYE057.

 

Initial action

  1. You will need to access the ’Unallocated Worklist’ within ETMP to identify the cases where employers have notified us of CIS deductions suffered. These cases will be noted on the worklist with a clearing lock of ‘C’. To obtain a list of the cases go into the unallocated worklist on ETMP (under Payments & Collection, Maintain Account) and set the clearing lock filter search box to C and run the filter. This will return a list of cases where the employer has notified us of CIS deductions suffered and the employer’s account is in credit (overpaid) at the end of the relevant tax year

CIS deductions suffered

Note: Only limited company subcontractors can claim CIS deductions suffered against their PAYE payments and include details of them on their EPS as detailed in the CISR Manual at CISR76020.

  1. Check that the employer name on the EPS is a limited company
  • If the employer is a limited company go to Step 3

 

  • If the employer is not a limited company, contact the employer and inform them that they are not able to claim CIS deductions suffered against their PAYE payments and tell them that they should include this information on their SA return

 

  • Agree with the employer that they are not entitled to claim CIS deductions suffered

 

  • Tell the employer to submit a revised EPS for the relevant year to amend the CIS deduction suffered amount to zero. Leave the clearing lock against the credit to ensure ETMP does not try to use it against future liabilities. If the employer has taken credit for CIS deductions suffered during the year and used this credit against PAYE liabilities, you will need to make them aware that this amount will now be due for payment

 

  • Set a three month B/F against the Locked amount within ETMP (see ETMP Help cards on the Finance Intranet site for guidance)

 

  • Add an ETMP note of actions taken. Take no further action until B/F is due. At B/F if no revised EPS has been received, POP the amount relating to the CIS deductions suffered amount shown on the final EPS (see ETMP Help cards on the Finance Intranet site for guidance) and add an ETMP note confirming action taken. When processed this will clear the item from the worklist. No further action is required
  1. Use ETMP View customer record to confirm we have received all FPS information up to month 12 or, in cessation cases the cessation date. If all FPS information is up to date, go to step 4
  • If FPS information is not up to date contact the employer and ask them to submit any outstanding returns. Await receipt of the returns before proceeding further
  1. Compare the CIS deductions suffered, year to date, amount on the final EPS for the tax year. This may be the month 12 EPS or may relate to an earlier period if the scheme has ceased. Compare with the ‘deductions figure’ held on the CISR system

To do this

  • Open CISR using ‘My Workplace’
     
    And

 

  • Select the ‘Corporate Services’ folder, followed by the ‘Employers’ folder

 

  • Select one of the following user roles, as appropriate: ‘CISR View Only’, ‘CISR Processor’ or ‘CISR Process Manager’

 

  • You will have now reached the CISR ‘Identify Customer’ window

 

  • Enter the employer’s UTR in the ‘UTR’ field
     
    Note: You must only use the UTR, otherwise you will not get access to the employer’s subcontractor record.

 

  • Select ‘Internal Enquiry’ in the ‘Contact’ drop-down box and select the [OK] button

 

  • Go to step 8

 

  • Otherwise, if you have difficulty in obtaining the employer’s UTR, go to step 5

Note: If there has been a merger or succession, add together the ‘CIS deductions figures’ from the CISR system for both the old and the new employer references.

Problems obtaining the CIS data

  1. If you do not have the employer’s UTR, this can be obtained from the following sources
  • Use EBS Function VIEW LIMITED COMPANY/DIRECTOR DETAILS to view the UTR shown in the ‘Company UTR’ field

 

  • Use EBS Function VIEW EMPLOYER NOTES and check the employer record pad to review the information recorded (especially form P510)

 

  • Corporation Tax (CT) section or file

 

  • If you have been able to establish the company UTR, and this is not held on the employer’s EBS record, use EBS Function AMEND LIMITED COMPANY & DIRECTOR DETAILS to update the employer record. Go to step 8

Note: When entering a company UTR on EBS, the office number should be entered in field one. If you do not know the office number for the taxpayer a default of 001 should be entered.

Otherwise

  1. If you are unable to find the UTR
  • Contact the employer and request the UTR

 

  • Where the employer does not know the UTR request their company registration number (CRN) and the date they became a limited company

 

  • Use COTAX Function TRCT (Trace Taxpayer) to obtain the UTR based on the information supplied by the employer

 

  • If you have been able to establish the company UTR, and this is not held on the employer’s EBS record, use EBS Function AMEND LIMITED COMPANY & DIRECTOR DETAILS to update the employer’s EBS record with the UTR. Go to step 8

Otherwise

  1. Where you establish that the employer was not a limited company for the year of the claim, do not continue to make the compare at this stage
  • Contact the employer and advise them that, based on the information you hold, they were not a limited company for the year of the claim and as such they are not eligible to make a claim for CIS deductions suffered on their EPS. Advise them that if they are not an eligible limited company they must submit a revised EPS for the relevant year to amend the CIS deduction figure to zero. Leave the clearing lock against the credit to ensure ETMP does not try to use it against future liabilities. If the employer has taken credit for CIS deductions suffered during the year and used this credit against PAYE liabilities, you will need to make them aware that this amount will now be due for payment

 

  • Set a three month B/F against the Locked amount within ETMP. Add an ETMP note of actions taken

If you receive a reply which states that the employer was in fact an eligible limited company, ask for the company UTR

  • Use COTAX to confirm the company UTR, and if this is not held on the employer’s EBS record, use EBS Function AMEND LIMITED COMPANY & DIRECTOR DETAILS to update the employer’s EBS record with the UTR. Go to step 8

If the employer informs you that they are an eligible limited company but that the CIS Deductions were recorded against another subcontractor (this could be the proprietor or partnership before the limited company was incorporated) then follow the guidance in the CISR Manual at CISR77010, CISR77610 and CISR77620

Otherwise

If no reply is received at the BF date or the employer confirms that the claim was made in error

  • Check the record to ensure the employer has submitted a revised EPS to reduce the CIS deduction figure to zero. If the employer has not submitted a revised EPS, POP the amount relating to the CIS deductions suffered amount shown on the final EPS (see ETMP Help cards on the Finance Intranet site for ETMP guidance) and add an ETMP note confirming action taken. When processed this will clear the item from the worklist. No further action is required

CISR / final EPS compare

  1. From the CIS Main menu window, select
  • The subcontractor registration ‘As Company’
     
    And then

 

  • ‘View Customer’ from the menu options at the bottom of the window
     
    And then

 

  • [Designatory Details] button at the bottom left of the ‘Registration Details’ window
     
    And then

 

  • ‘Payment Details’ from the menu at the top of the ‘Company Details’ window

This will show you, under the heading ‘Total Made To Date’, for this employer in their capacity as a subcontractor, the

  • ‘Total Payments:’ made to date

 

  • ‘Cost Of Materials:’ supplied by them
     
    And

 

  • ‘Total Deducted:’ showing the total of all CIS deductions made from their payments by all contractors for whom they worked in the selected period

You will need to set the ‘Period Starting:’ and ‘Period Ending:’ dates for the year you want to see. For example, for the tax year 2012-2013, this will be ‘Period Starting:’ 06/04/2012 and ‘Period Ending:’ 05/04/2013

  • Select the [Filter] button to display the payments relating to the tax year (or other period) that you have chosen

The individual payments and deductions for the filtered period will then be displayed in the list box immediately below the [Filter] button, with the grand totals for that period shown above in ‘Total Payments:’, as described earlier. If you need more information see CISR90210

Important notes:

a. If the subcontractor registration selection described in the previous step does not read ‘As Company’, but states ‘As sole trader’ or ‘As partnership’ then the employer is not a limited company. Where that happens

  • Do not continue to make the compare at this stage

 

  • Go back to Step 7

Where the employer / contractor is a limited company

b. If the subcontractor registration for this employer / contractor is ‘greyed-out’, the employer / contractor has not registered as a subcontractor, take the following action

  • Instruct the employer / contractor to register as a subcontractor immediately

 

  • Advise that as the employer / contractor appears not to have previously registered as a subcontractor, there may be a delay in dealing with any repayment

 

  • Ask the employer / contractor for the information in Step 11 below

If the subcontractor or their agent requests details of any CIS payments and deductions as reported on the monthly returns of contractors for whom they have worked, you must not automatically give details of the information shown on CISR. It is the subcontractor’s responsibility to maintain accurate business records.

If the subcontractor’s contractor(s) cannot, or refuses to provide the necessary documentation, the subcontractor should put their request in writing and send it to the Newry or Hull CIS Centres, as appropriate. (See below)

They should include full details of the contractor(s) for whom they worked (name, references, address) and details of the months for which they are missing the data. They must also give reasons why they do not have the Payment and Deduction Statements (PDS) and why they could not get a copy of the PDS from the contractor

All requests to supply this information in bulk, received from subcontractors’ agents or any other third-parties must be refused

Written requests for CIS payment and deduction details from subcontractors that are companies (CT customers) should be sent to

HM Revenue and Customs
CT CIS Centre
Cherry Court
36 Ferensway
Hull
HU2 8AQ

Written requests for CIS payment and deduction details from subcontractors that are individuals or partners in firms (SA customers) should be sent to

HM Revenue and Customs
CT CIS Centre
Carnbane Way
Newry
BT35 6OG

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Making the CIS compare for all repayment and non repayment cases where a figure is recorded on the final EPS showing CIS deductions suffered

  1. Compare the figure for ‘CIS deductions suffered’ on the final EPS for the tax year, with the ‘Total Deducted:’ amount, shown on CISR

If the two figures agree, (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • Accept
    • The CIS deductions suffered amount and arrange to repay, after using existing guidance to check for any outstanding amounts on other HOD’s for the employer

Otherwise

  • Your next action will depend upon whether the amount recorded on CISR under ‘Total Deducted:’ is less than or greater than the amount shown as ‘CIS deductions suffered’ on the final EPS

Final EPS amount is less than that shown on CISR

  1. If the amount shown at ‘CIS deductions suffered’ on the EPS is less than the amount shown on CISR, under ‘Total Deducted’
  • Accept the amount recorded at ’CIS deductions suffered’ on the EPS and arrange to repay, after using existing guidance to check for any outstanding amounts on other HOD’s for the employer

 

  • Use ETMP Notes to record details of your actions to include
    • The amount recorded on CIS (on that particular date)
    • The amount shown in ‘CIS deductions suffered’

Note: Analysis of recent cases indicates that most of these cases correct themselves when amended CIS returns are received and the information in the note will be required if a further repayment request is received, you need not therefore take any further action.

Final EPS amount is more than that shown on CISR or where the employer has not registered as a subcontractor on CISR

  1. If the amount shown on the final EPS as CIS deductions suffered is greater than the ‘Total Deducted:’ amount shown on CISR and (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , or the employer has not registered as a subcontractor on CISR (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
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  • Contact the employer and ask them to submit
    • All relevant payment and deduction statements (PDS) for the tax year and a summary of these, month-by-month, with the associated contractors’ names and addresses, together with
    • Cross-referenced copies of bank statements supporting the PDS documents, in order to substantiate their claim for CIS deductions as shown on their final EPS return. (We need this evidence to be certain that the PDS are genuine)

Note: Any original PDS or bank statements received should be copied and returned to the employer.

Where PDS are not available (where the contractor is a limited company that has been dissolved or is a non limited company that is now insolvent and ceased to trade), you should ask the employer to submit invoices for the work done, married up with the bank statements showing payment for the work done as shown by the invoice

If the employer claims that they were not provided with some, or all PDS documents because the contractor became insolvent and you have now obtained invoices and bank statements

  • Refer the case to Debt Management & Banking (DMB) to follow the guidance in the CIS Manual at CISR74040 advising them of the amount that you have now given credit for to the employer, and that you have been able to verify from the PDS or invoices and bank statements supplied. Go to step 12

 

  • Use ETMP note to record details of your actions

If the employer

  • Is unable to provide PDS or invoices supported by copy bank statements to substantiate the amount claimed in ’CIS deductions suffered’
     
    Or

 

  • Does not reply to your enquiry
    • Go to step 13

Otherwise

  • On receipt of the PDS and supporting copy bank statements, go to step 12

Checking the Payment and Deduction Statements (PDS) or invoices

  1. Compare the total of the deductions shown on the recently supplied PDS documents or invoices, each of which must be supported by entries for the net payments on the copy bank statements, with the total ‘CIS deductions suffered’ amount shown on the final EPS
  • Check carefully that PDS documents or invoices have not been supplied in the name of a sole trader or partnership where a business has recently incorporated as a limited company

If this happens you should

  • Follow the guidance in the CISR Manual starting at CISR77000

On no account should credit for a CIS deduction be granted to an employer, where they say that although a deduction was due to be made from a payment, the payment was never actually received from the contractor

If you are now satisfied that the amount of ‘CIS deductions suffered’, shown on the final EPS, agrees with the total deductions shown on the PDS documents you have been sent, (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • Accept the amount recorded at ‘CIS deductions suffered’ on the EPS and arrange to repay, after using existing guidance to check for any outstanding amounts on other HOD’s for the employer

 

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  • Use ETMP notes record details of your actions

 

  • Do not await a reply from RIS in these circumstances

 

  • Where the employer had not registered as a subcontractor on CISR at the date of your initial check (but has since done so), send a full report, entitled ‘Company subcontractor seeking repayment where no subcontractor record set up’ to CIS Centre Newry

This report should provide

  • Contractors name
  • Contractors UTR
  • Details of the CIS deductions for each month and year which need to be recorded on to CISR for each month
  • File the copies of the PDS and bank statements in the employer record pad

Note: Ensure that the contractor’s UTR is included in the report and send to

HM Revenue and Customs
CIS Centre
Carnbane Way
Newry
BT35 6QG

Otherwise go to step 13

Final steps to resolve discrepancy, for all repayment and non repayment cases where a figure is recorded for YTD ‘CIS deductions suffered’ on the final EPS

  1. The action you must now take to resolve the matter depends on the response you have received from the employer

If the employer has

  • Been unable to provide you with sufficient PDS documents or invoices, supported by copy bank statements, to verify the ‘CIS deductions suffered’ figure shown on the EPS, (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  
     
    Or

 

  • Has not replied to your enquiry

You should

  • Inform the employer that the amount of CIS deductions claimed has been restricted to £XXXX.XX because this is the only amount that you are currently able to confirm, (subject to the employer producing further documentary evidence of the claimed deductions). Advise the employer that if they are unable to supply further evidence of the claimed deductions the amount will not be repaid

 

  • Only the full amount of a credit from the unallocated list can be repaid so the unverified amount should be put to POP prior to arranging repayment of the verified amount

 

  • Use ETMP notes to record details of your actions

If you restricted the claim because the employer did not respond to your request to supply PDS documents or invoices, supported by copy bank statements

  • BF the case for four weeks to await any response from the employer

 

  • If the employer does not respond make a note of action taken on ETMP notes. No further action is required
     
    Otherwise

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  • Where the employer had not registered as a subcontractor on CISR at the date of your initial check (but has since done so), send a full report, entitled ‘Company subcontractor seeking repayment where no subcontractor record set up’ to CIS Centre Newry
  • This report should provide
  • Contractors name
  • Contractors UTR
  • Details of the CIS deductions for each month and year which need to be recorded on to CISR for each month
  • File the copies of the PDS and bank statements in the employer record pad
  • Newry will use this information to make sure the CIS deductions in question are shown on the CISR record

Note: Ensure that the contractor’s UTR is included in the report and send to

CIS Centre Newry
HM Revenue and Customs
CIS Centre
Carnbane Way
Newry
BT35 6QG