Key point: CIS deductions are payments on account of tax, not necessarily your final tax bill. If deductions suffered exceed the final liability after allowable expenses and other tax calculations, a refund may be due.
Why do CIS subcontractors often receive refunds?
A contractor may deduct 20% from the labour element of payments throughout the year, while the subcontractor's final taxable profit is calculated after allowable business expenses. That can mean more tax has been deducted than is ultimately due.
What records help support a claim?
- Monthly CIS payment and deduction statements.
- Sales invoices and bank receipts.
- Receipts and invoices for allowable expenses.
- Mileage or vehicle records where relevant.
- UTR and business details matching HMRC records.
Sole trader vs limited company
The reclaim route differs. A sole trader normally brings CIS deductions into the Self Assessment calculation. A limited company normally sets CIS suffered against PAYE liabilities through payroll reporting and may need to deal with any excess through HMRC's company CIS process.
Why can a CIS refund be delayed?
Common causes include missing deduction statements, mismatched business details, figures that do not reconcile to contractor returns, outstanding tax issues or HMRC security checks.
Do not invent expenses to increase a refund
A larger expense claim can reduce taxable profit, but expenses must be genuinely allowable and supported by appropriate records. The objective is the correct refund, not the biggest possible figure.
Frequently asked questions
Is a CIS refund automatic?
Not always. The treatment depends on your business structure and tax position, and HMRC may require information before releasing a repayment.
How long does a refund take?
Times vary and HMRC checks can extend the process. Accurate, reconciled records reduce avoidable delays.
Can I claim without CIS statements?
Statements are important evidence. If they are missing, ask the contractor for copies and reconcile payments to your bank records.