Paying the tax and proper national insurance for your business is your job even if you have registered with the CIS or commonly known as the construction industry scheme. If you work for a contractor as a registered subcontractor then there will be an at source deduction of 20% of your wages. If you work as an unregistered subcontractor then there will be a 30% deduction from your wages. You will still have to pay the taxes and national insurance amount even if the contractors have made deductions during the year. The statements will be provided to you on the monthly basis and will help you claim a refund on the amount that has been deducted by the contractor. The contractor will pass on the deduction statements to HMRC from where a CIS refund will be claimed. This scheme has been introduced by HMRC so that everyone pays their share in the tax and the things remain simple.
How to claim a CIS refund?
By the end of the year, you as a subcontractor might have overpaid the tax amount. This might happen due to the deduction of the amount on monthly basis according to the rules set by the construction industry scheme. To claim a CIS refund you must have correct and legal information about your CIS return complaint. Your tax bills and national insurance payment will be worked out by HMRC if you provide accurate and complete information about the deductions made throughout the year. Your CIS refund claim also largely depends upon your expenses along with the overpayment of the taxes that is caused due to the deductions made by the contractors throughout the year.
You need to have all the deduction statements provided to you by your contractor and correct figures related to your eligible expenses to claim your CIS refund.
What if the contractor does not provide CIS statements?
The construction industry scheme statements are crucial as they help you in keeping a complete record of your earnings, income, and the deductions that are made by the contractor, and the taxes that you have paid. The contractor has to provide you with monthly CIS statements and these statements are also passed on to HMRC by the contractor. However, if you have not been provided with the CIS statements by the contractor or the contractor has gone out of the business, replacement copies can be requested and obtained from HMRC. These copies can be used to claim a CIS refund. These statements are used as evidence to claim a CIS refund.
How much time does it take to get a CIS refund?
A proper procedure of security checks and information authenticity check is conducted by HMRC. After you file your tax return and claim a CIS refund, all the CIS statements provided by your contractor and all the expenses that are eligible to offset against your income are properly checked by HMRC. Once the authenticity and legality of the data and information provided by you are confirmed, you may get your refund in one to eight weeks after filing for it.