When will I get a CIS refund?

Apr 2, 2024 | Construction

Having too much tax deducted from your pay under the construction industry scheme (CIS) is always frustrating. But you may be owed a CIS refund – when will you get yours though? Let’s try and answer that question for you.

The construction industry scheme

The CIS is a tax deduction scheme for the construction industry, designed to stop tax evasion by keeping an eye on the payments contractors make to their subcontractors.

Specifically under the scheme, contractors have to deduct money from their subcontractor’s pay and send it to HMRC. That deduction acts as an advance payment towards the subcontractor’s tax and National Insurance contributions.

Remember though, if you are a subcontractor but then contract out the job to someone else, you become the contractor for CIS purposes. You then have to calculate and remove deductions from the pay you give to your subcontractors.

How much is deducted depends on whether or not you are registered on the CIS with HMRC. If you are, 20% of your payment will be deducted. If not, 30% will be deducted.

CIS refunds

Under the CIS, you have to rely on the contractor submitting the correct figures to HMRC in their CIS return. That means mistakes could happen, and you could be owed a refund.

To claim this refund, you may need to prove that you were deducted the right (or wrong) amount. So, make sure to always keep good care of key documents, like invoices, CIS statements and tax returns.

HMRC won’t ask for these documents straight away and might not at all – the point is that they may, and if that happens, you’ll want to be able to hand over what you need to right away.

You can claim your CIS refund online on the HMRC website.

How long do CIS refunds take?

Once you have filed your claim, it takes on average of between 6 to 12 weeks for HMRC to process and pay the rebate. If the refund is pretty big or you haven’t had one before, HMRC might run some extra security checks by asking you to confirm your identity and personal details. So don’t get a fright – this is perfectly normal.

You can also give agent authorisation to someone else, which is a way to let your accountant represent you and act on your behalf when chatting with HMRC. If there are any problems, your accountant can step in and help, leaving you free to get on with work. They can also get hold of information related to your previous employers so they can have everything they need to file your return.

When your accountant asks for agent authorisation, HMRC will send you a letter to your address which they have on file with a code; share that with your accountant and you’re golden.

Get help with the CIS

Navigating the CIS can be tricky, especially when it comes to refunds. But having an accountant by your side who will put you first can seriously help.

So, if you’re a contractor or subcontractor in the construction industry, feel free to get in touch with us to discuss what we can help you with.

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