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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
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Construction industry cases: construction industry cases: in-year repayments to subcontractors (Action Guide)

When you want to make an in-year repayment to a subcontractor in the construction industry, follow steps 1 - 15 below. The guide is presented as follows

  Steps 1 - 5
   
  Steps 6 - 11
  Steps 12 - 14
  Step 15

For details of how to access any of the SA functions, select ‘Index Of Functions’ on the left of the screen.

Claim procedure (individual)

1. Obtain a completed form CIS40
   
2. Review all aspects of the subcontractor’s tax affairs to ensure that
  * The accounting period ended on or after 6 April and the construction industry business profit figure is known
  * All outstanding returns have been received
  * No tax / Class 4 NIC arrears exist (although the CIS deductions can be set off against tax / Class 4 NIC arrears and any excess taken into account in the in-year repayment claim)
3. Check the repayment claim against the information held in the ’Payment Details’ window in CIS for the subcontractor to confirm that the deductions(s) being claimed appear there
4. Where it is considered that making a repayment may lead to an underpayment
  * Restrict the repayment and
  * Explain to the taxpayer why the repayment has been restricted
5. Where any doubt exists about the correctness of the details supplied, repayment should be refused and the taxpayer advised that the request for repayment will be considered
  * After the end of the year of deduction and
  * Following receipt of the SA return
  Note: Only refuse repayment where you have strong grounds for doing so.

Claim procedure (partner)

6. Obtain a completed form CIS41 and statement of consent (part E)
   
7. Review all aspects of the subcontractor’s tax affairs to ensure that
  * The accounting period ended on or after 6 April and the construction industry business profit figure is known
  * All outstanding returns have been received
  * No tax / Class 4 NIC arrears exist (although the CIS deductions can be set off against tax / Class 4 NIC arrears and any excess taken into account in the in-year repayment claim)
  * The statement of consent by the partnership has been signed on the CIS41
8. Send the form(s) CIS41, for each partner claiming, to the office responsible for the partnership return
  * The operator responsible for the partnership return should
  * Ensure that the correct figures for share of profit and CIS deductions are shown on Part E
  * Enter your initials alongside the entry for the claimant
  * Retain a copy of each CIS41 in the partnership return
  * Return the original form(s) CIS41 to the office responsible for the individual partner’s return
  * The operator responsible for the individual partner’s return should, upon receipt of the CIS41 from the office responsible for the partnership return
  * Deal with the repayment calculation
9. Check the repayment claim against the information held in the ’Payment Details’ window in CIS for the subcontractor to confirm that the deduction(s) being claimed appear there
10. Where it is considered that making a repayment may lead to an underpayment
  * Restrict the repayment and
  * Explain to the taxpayer why the repayment has been restricted
11. Where any doubt exists about the correctness of the details supplied, repayment should be refused and the taxpayer advised that the request for repayment will be considered
  * After the end of the year of deduction and
  * Following receipt of the SA return
  Note: Only refuse repayment where you have strong grounds for doing so.

Making a repayment

| 12. | Where the overpayment is to be repaid or allocated against an SA charge use | || |   | * SA function CREATE FREESTANDING CREDIT to enter a credit on the SA record. More detailed advice on creating a freestanding credit is provided in section ‘Issue Repayment’ in business area ‘Repayments’ (SAM110000 onwards)
 
And, if appropriate | |   | * SA function ISSUE REPAYMENT FROM OVERPAID BALANCE to repay the taxpayer, agent or other nominee. More detailed advice on making repayment is provided in section ‘Issue Repayment’ in business area ‘Repayments’ | | 13. | Where the over-payment is to be set-off against another existing CODA or other liability, you will need to use SA331 OAS Allocation Form to reallocate the credit shown on the Self Assessment Statement of Account against that liability | |   | * If the form does not need to be authorised, send it as an attachment to an e-form to ‘AO Cumbernauld WAM’ and select ‘Sch D(SA)’ work area in the Destination Office Details | |   | * If it does require authorisation, send it via internal mail to address on the form | | 14. | After repayment has been made make a record on the papers of | |   | * Allowances used | |   | * Deduction forms submitted, where utilised in this repayment | |   | * Repayment made |

Verification procedures

15. To verify the CIS deductions claimed see the guidance in the Construction Industry Scheme Reform (CISR) manual at CISR73620