Construction Industry Scheme - CIS7200

Deductions: SA subcontractors: introduction

DEDUCTIONS AND SA SUBCONTRACTORS

This paragraph serves as an introductory overview of the module. For more detailed coverage of particular processes, use the above links to action guides or information panels.

The module covers the processes involved in dealing with claims to credit or repayment for CIS25 deductions suffered by sole traders and partners. It covers the period from receipt of a claim to the application of the credit, the making of the repayment or the refusal of the claim.

Specific processes covered include the following

• dealing with claims made in an SA return

• dealing with in-year repayment claims

• dealing with in-year set-offs against pre-SA arrears

• dealing with credit arising to bankrupts

For coverage of the general principles of the deduction and claims to credit procedures see the module at CIS7000. That module also deals with less routine cases.

OUTLINE

Subcontractors who are not certificated suffer deductions under ICTA88\s559 (4) which are made on account of the tax and Class 4 NIC payable on the subcontractor's trading profits. ICTA88/sS559 (4) says that such deductions shall be treated as being income tax paid against the subcontractor's own tax liability. The legislation does not specify any particular order of set-off. Credit is normally given first against the tax and Class 4 NIC due for the year in which the deductions were made. An excess of credit over liability can lead to repayment.

In this module 'credit' can be taken to mean either credit by way of set-off, or excess credit being repaid, unless otherwise specified.

CIS25 deductions from the current tax year cannot be used against any SA year Payments on Account or Balancing Charges.

In-year repayments can be used for Payments on Account or Balancing Charges, because they are treated as cash.

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