As a subcontractor, you are still responsible for paying tax and national insurance (NI) for your business come the end of the tax year, even though a contractor has made monthly deductions throughout the year. To help you submit tax returns for your business, contractors are obligated to give you a monthly statement of their CIS deductions. If you feel as if you are due a CIS tax refund, McKellar Accountancy will guide you through the steps to take.
CIS Tax Refund as Sole Traders and Partners
To go about processing a CIS tax refund as a sole trader and partner you should still send in your self assessment tax return as normal at the end of the tax year. HMRC will work out your tax and NI bill and make sure that deductions made by contractors are taken off. If you are due a tax refund, HMRC will let you know and process a tax refund.
CIS Tax Refund for Limited Companies
If you are operating as a limited company and have paid CIS deductions throughout the year, you must claim these back through your company’s payroll scheme. Be careful, you cannot claim CIS tax through your corporation tax return. If you try to do this you may receive a penalty.
What you need to do in order to begin the process of a CIS tax refund for your limited company:
- Send a monthly Full Payment Submission to HMRC
- Send an Employer Payment Summary to HMRC and including details of total CIS deductions made
HMRC will then take those CIS deductions off of the PAYE tax and National Insurance owed. If there is a remaining balance it will then need to be paid by the usual deadline. Also, if your PAYE amount has been reduced to zero and you still have CIS deductions to claim, you can carry these forward and process it in the next quarter.
Don’t have all your CIS statements?
If you are unable to begin the process of a CIS tax refund because you do not have all the appropriate CIS statements from your contractor, you can request they send duplicate/replacement copies. If you are unable to request them from the contractor, write to HMRC. In your correspondence to HMRC, simply include;
- Unique Taxpayer Reference (UTR)
- Name and Address of Contractor
- Contractor’s UTR (if known)
- Dates of payments or months when the contractor paid you
- Reason you do not have replacement statements from the contractor
McKellar Accountancy’s Construction Industry Scheme service will guide you through every aspect of handling tax as a subcontractor or contractor. Get in touch, today.