RTI and CIS deductions

According to a recent statement from HMRC, Real Time Information (RTI) is causing confusion for some businesses in the Construction Industry Scheme (CIS). The trouble arises where, on the one hand, CIS deductions have been taken from a company’s income and on the other, it has deducted PAYE tax, NI and CIS from employees and sub-contractors.

HMRC says the position hasn’t changed since RTI came into effect. Limited companies are allowed to set CIS deductions against their monthly PAYE and NI payments. However, partnerships and sole traders cannot, they must only set CIS deductions against the Income Tax payable on their profits.

HMRC has helpfully confirmed that companies can reduce the monthly PAYE that they are due to pay by the amount of CIS tax deducted from their income, even where a statement of these deductions has not been provided from the contractor who made them. HMRC has produced a working sheet so that companies can keep track of the position. For a weblink to HMRC’s worksheet, visit (TX DC 13.22.09)

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