Introduction to CIS Suffered Limited Company
The Construction Industry Scheme (CIS) is a tax deduction scheme which involves tax being deducted at source from payments which relate to construction work. The scheme applies to both mainstream contractors and subcontractors in the UK. If your limited company operates within the construction industry, this guide will help you understand how you can claim back any CIS deductions which you’ve suffered.
How CIS Works for Subcontractors
Under the CIS, contractors must deduct 20% from their payments to subcontractors and pay this over to HMRC. If a subcontractor isn’t registered for the scheme, the deduction increases to 30%. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Claiming Back CIS Deductions
As a limited company, if you’ve suffered CIS deductions during the year, you may be able to claim these back from HMRC or set them off against your other tax liabilities.
How to Claim Back CIS Deductions
- Register for CIS: First, your company must be registered for CIS. You can do this on the HMRC website.
- File Monthly CIS Returns: You should then file monthly returns to HMRC detailing your payments to subcontractors and any deductions made. This needs to be done even if you made no payments in a given month.
- File Your Corporation Tax Return: At the end of the tax year, you need to file a Company Tax Return. This should include your total income, outgoings, and CIS deductions for the year.
- Claim Your Deduction: You can claim your CIS deduction by reducing your Corporation Tax by the amount of CIS deductions you’ve suffered. This is done on your corporation tax self-assessment.
Important Things to Consider
- Your company must be up to date with its tax returns and payments before HMRC will process a repayment.
- HMRC may want to conduct a repayment review before they issue a repayment. This can delay the process.
- If your company is due a CIS repayment but also has other tax liabilities, HMRC will usually offset the repayment against these liabilities.
Conclusion
In conclusion, if your limited company has suffered CIS deductions, you can claim these back by reducing your Corporation Tax payment or by applying for a repayment from HMRC. It’s essential to keep accurate records and ensure your tax affairs are in order to make this process as smooth as possible.
If you need any further help with claiming back CIS deductions, it’s recommended that you seek professional advice. Contact your accountant or tax adviser who can guide you through this process.
