Limited companies, who are registered as CIS sub-contractors without gross payment status, will have CIS tax deducted from their invoices. Where the company runs a payroll the CIS tax should be first off-set against any PAYE due, making the declaration and claim on the Employer Payment Summary (EPS) each month.
Where there is insufficient PAYE to absorb all the CIS tax deducted the company needs to submit a claim to HMRC for a repayment. Only when that repayment is processed can the company ask for the amount due to be set against other tax liabilities such as VAT or corporation tax.
HMRC have produced a help card which details the CIS repayment procedure (see link). This stresses that the repayment claim must be made in writing, but the company doesn’t have to send any supporting documents. Such back-up information will only be required if HMRC can’t match the claim to the CIS deductions reported by the contractor.
The latest Employer Bulletin (no. 66) says limited companies can now make CIS repayment claims online. This is a very new development, which has come as a surprise to CIS tax professionals, as even the members of the CIS operational forum were not aware that such an online facility was planned.
However, it’s not all good news, if the CIS repayment is to be directed to the company’s agent or nominee, the claim must be submitted on paper.