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SAM110101 | Repayments: issue repayment: in-year repayments to subcontractors (Action Guide)

From HM Revenue & Customs · Self Assessment Manual

When you want to make an in-year repayment to a subcontractor in the construction industry, follow steps 1 - 15 below.

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 request)

3. Check the repayment request against the information held in the ’Payment Details’ window in CIS for the subcontractor to check that the deduction(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 request)

8. Send the form(s) CIS41, for each partner claiming, to the office responsible for the partnership record

  • The operator responsible for the partnership record 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, along with the form(s) CIS25, with the relevant partnership return

    • Return the original form(s) CIS41 to the office responsible for the individual partner’s record

The operator responsible for the individual partner’s record should upon receipt of CIS41 from the office responsible for the partnership record

  • Deal with the repayment calculation

9. Check the repayment request against the information held in the CIS25 (Control), if already prepared, or any ‘Previous Vouchers List’ screen print. Where there are no earlier repayment requests for the period obtain a ‘Captured Vouchers List’ screen print to record the credit / repayment details

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

  • if appropriate, SA function ISSUE REPAYMENT FROM OVERPAID BALANCE to repay the taxpayer, agent or other nominee

13. Where the over-payment is to be set-off against an existing CODA liability use

  • CODA function DO to make the set-off

  • SA function AMEND TAXPAYER SIGNALS to set the No Repayment signal. (The setting of this signal will prevent an automatic repayment and possible over-repayment being made when the return is received)

  • SA function MAINTAIN SA NOTES to enter a brief note recording the fact that a set-off has been made

14. After repayment has been made make a record in the CIS25 (Control), or on the ‘Captured Vouchers List’ screen print of

  • Allowances used

  • Forms CIS25 submitted, where utilised in this repayment

  • Repayment made

Verification procedures

15. Verification procedures in the Construction Industry Scheme Reform (CISR) manual at CISR73620 should be applied.

Verification of payments/vouchers made before the 6 April 2007 will be recorded on the CISL system and to check these on CISL, you will need to request a search of the CISL Archive (see SAM110100).