Questions and Answers
Limited Company Construction Industry Scheme Deductions
I run a small building maintenance company and some of the work we do falls under the Construction Industry Scheme. Consequently, the business who contracts us for the work deducts 20% tax at source under the scheme on all amounts we invoice for labour. How do we offset these deductions against our Corporation Tax liability, and if so, how?
Under a previous CIS scheme companies that had tax deductions made from their income were only able to use these deductions to reduce their final Corporation Tax bill.
However, a change to the scheme in April 2002 enabled sub-contractor companies to offset CIS deductions made from their income against the monthly or quarterly payments due to the HM Revenue & Customs.
The deductions are set against the PAYE & NIC liability of any employees that you may have paid, and if applicable, from any CIS deductions you have made from sub-contractors you use.
These amounts are offset monthly, and are incorporated into the Employers end of year return (form P35) and if there is a balance at the end of the tax year owing to you, you can request it to be refunded to you once the form has been processed.
Date published 5 Dec 2012
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