Construction Industry Deductions for a Limited Company

I run a small building company and most of the work we do falls under the Construction Industry Scheme. Consequently, some of our customers deducted 20% tax at source under the scheme on the amounts we invoiced for labour in the year to 5th April 2010. How do we claim relief for this?

1st May 2010

Where a sole trader suffers tax deductions at source through the Construction Industry Scheme (CIS) a claim for relief for that tax is made on the annual self assessment tax return.  A limited company does not, however, claim relief against the annual corporation tax liability.

Where a limited company receives income that has had tax dedeucted through the Construction Industry Scheme, that tax can be offset against certain monthly or quarterly payments they are due to pay HM Revenue & Customs. The tax suffered is set against the PAYE and NIC amounts you are paying on behalf of any employees that you may have and, if applicable, from any CIS deductions you have made from subcontractors you use.

If you require any further advice in relation to this, or any other aspect of the Construction Industry Scheme regulations, you shoukd seek advice from an accountant, as fines and penalties for not dealing with payments correctly can be severe.

By Jo Nockels

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