How do I reclaim CIS deductions?
There are two totally different systems for reclaiming tax deducted from subcontractors under the Construction Industry Scheme.
If you are self employed, either as an individual or in a partnership, you claim them back via your Self Assessment Tax Return. If you are in a partnership you need to ensure that the total figure and your share of the deductions are entered at boxes 3.97 and 24 on the Partnership Tax Return and then at box 28 on the Partnership pages of your Tax Return. if you are an individual you enter them at box 37 of the Self-emplyment pages of your Tax Return.
If the subcontractor is a limited company them the CIS deductions are claimed via the annual P35 wages return. Credit can be gained during the year for deductions
suffered by reducing the monthly PAYE/NIC/subcontactor payments due to HMRC by the value of any deductions suffered for which the company holds a PDS. Details of how to claim back limited company CIS deductions can be found at www.hmrc.gov.uk/cis/cis-qanda.article on the HMRC website.
Whether you are an individual, partnership or limited company subcontractor it is essential to obtain a Payment & Deduction Statement (PDS) from each of its contractors every time it is paid. Even if a PDS is held HMRC may ask for further evidence of payment eg bank statements if the contractor has not declared the payment on their monthly CIS return.
If you have changed the legal status of the business eg joined a partnership instead of being an individual it is essential that the contractor knows the new UTR and states it on the PDS.