Where the deductions come from

Each contractor that pays your company must give it a payment and deduction statement within 14 days of the end of each tax month4. Keep every statement: they are the evidence for your claim, and HMRC expects the company to keep them with a record of the deductions it has used1. Add the statements up for the tax year so far, from 6 April. That running total is the figure that goes on the EPS1.

Claiming on the EPS

Use the company’s payroll scheme: send your FPS as usual, and at the same time an EPS with the total CIS deductions for the year to date1. The EPS is due by the 19th of the following tax month3. HMRC then takes the CIS deductions off what the company owes, and the company pays the rest by the usual date1.

A worked example

Contractors deducted £600 from the company’s invoices in the tax month to 5 May, and £400 in the month to 5 June: the EPS for the second month shows £1,000 for the year to date. If the company’s PAYE bill that month is £700, the deductions cover it in full; with nothing to pay, the company says so on the EPS and carries the rest forward1.

Check your company’s dates and set a reminder

Search the Companies House register. Your company page shows its filing dates, what to file next and a reminder you can set.

When the deductions are more than the PAYE

If the CIS deductions are more than the PAYE the company owes, it carries them forward to the next period, as long as that’s in the same tax year, telling HMRC on the EPS that it has nothing to pay1. Anything still left after the tax year ends can be claimed as a repayment from HMRC1. If HMRC asks for evidence and doesn’t get it by its deadline, it amends the claim from its own information and the company can’t make any more claims that tax year1.

Why not the Company Tax Return?

A sole trader claims CIS deductions on their Self Assessment return, but a company is different: “Do not use your Corporation Tax return to pay tax with your deductions”1. In the accounts, the work is shown at its full price, before the deduction, with what HMRC still owes the company as a debtor.

If the company has no payroll yet, it needs one for this: read running payroll for a director. If it also pays subcontractors itself, see CIS monthly returns and verifying a subcontractor.

Claiming with Fileyear

Fileyear’s CIS reclaim takes the total of your deduction statements for the tax year so far, starting from last month’s claim, files it on an EPS before the 19th so it comes off that month’s PAYE, and carries the figure into the company’s accounts.