CISR72620 - Deductions: credit and repayment: subcontractor claims for reimbursement to contractor

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This action guide explains the steps you should take where a subcontractor claims credit for a sum they repaid to a contractor when, either an initial gross payment or a payment under deduction at an incorrect rate was made from them in error.

  1. Ask the subcontractor for any receipts from the contractor for the repayment made and establish the following information
  • the full name and address of the contractor
  • the date on which each payment was made
  • the gross amount of each payment
  • full details of any CIS deductions made from the payment
  • the amount for materials included in each payment
  • the amount repaid to the contractor and the date the repayments were made.
  1. On receipt of this information and any receipt requested at 1) above, proceed as follows
  • use function “Trace & Match” on the PAYE Service to identify the contractor and the employer and Accounts Office references
  • make a report to DMB advising that the subcontractor has reported the following payments were made gross, or a deduction was made from payments to them at the incorrect rate and that he later reimbursed the contractor for the deductions. You should ensure that details of the dates of payments, the amounts paid and the deductions said to be have been taken are included.
  • Ask DMB if they can confirm that the deduction that the subcontractor has reimbursed to the contractor, has now been paid to HMRC by the contractor
  1. If DMB confirms that the deduction has been accounted for you can allow the credit to the subcontractor.
  2. If DMB reports that the deduction has not been paid over to HMRC, write to the subcontractor to explain that you cannot accept the claim because the deduction has not been received from the contractor.