Sorting out CIS repayments

HMRC is able to give out more information to help reconcile the numbers for Construction Industry Scheme repayment claims
Around this time of year, net-paid limited company contractors begin the process of recovering or offsetting any Construction Industry Scheme (CIS) deductions which haven’t already been set against the company’s other tax liabilities, such as PAYE, NI, or CIS.
Some welcome news has been received from HMRC. For 2015/16, HMRC will be able to help limited company contractors who have received payments from which tax has been deducted under CIS, reconcile the deductions contractors think they have suffered, with those shown on HMRC’s records.  
In earlier years, any significant difference (of a few hundred pounds) between deductions stated to have been suffered by a contractor, and those shown on HMRC’s records as relating to that contractor, would result in HMRC asking for large quantities of evidence – deduction certificates, bank statements, paying-in slips, original invoices or applications for payment – to quantify the difference.
Now, after much lobbying by representatives of ICAEW, HMRC has seen sense. Once a claim has been received at Longbenton and a difference established, HMRC procedures now state “Where this shows a discrepancy, we issue the employer/agent with a list of CIS deductions for the year as held on CISR, including the month, contractor name, gross amount and deduction. We then ask for payment and deduction statements cross referenced with bank statements for any not on the list.”
This is a big step and will help contractors and their accountants to identify any differences and resolve them with HMRC.
The legal obstacles over divulging such information have been overcome, which will also allow the work on digital accounts to progress. We are told that this is still on target for April 2017, from when it will be possible to check online, CIS deductions made, against payments referenced to a UTR.
Members are reminded that excess CIS deductions can be offset against any other tax liability of that contractor, including VAT. If there are no liabilities, then an on-account payment can (and should) be made by HMRC on the agreed element of excess deduction, pending resolution of the difference.