A contractor takes 20% off the labour element of your invoice if you are registered and verified, or 30% if you are not. That money goes to HMRC against your company’s account, not your personal one.

Here is the part owners miss. Your company does not wait for a refund to benefit from it. Every month, the CIS suffered is set against what your company owes HMRC on payroll: PAYE, National Insurance, student loan deductions, and any CIS you have deducted from your own subcontractors. So if you have two employees and a monthly PAYE bill, that bill can be reduced to nothing before HMRC has processed a single claim form.

That only happens if someone tells HMRC the deductions exist. The Employer Payment Summary is the filing that does it. No EPS, no set-off, and you end up paying a payroll bill in cash while HMRC sits on money that is already yours.

I have seen companies do this for three years running. The refund always arrived in the end. In the meantime they were funding their own payroll twice over.

Once the tax year has ended on 5 April, you can claim whatever CIS is still sitting unused. HMRC then applies it to any overdue PAYE or corporation tax, and anything left can be repaid to your bank account or held against your VAT or next corporation tax bill.

Refusals are rare. Delays are common, and the reasons repeat:

• The EPS figures for the year do not match the payment and deduction statements the contractors issued.
• One or more monthly EPS submissions were skipped, so HMRC’s running total is lower than yours.
• The company tax return for the period has not been filed yet.
• The company is also a contractor and has monthly CIS returns outstanding.
• Nobody kept the statements, so when HMRC asks for evidence there is nothing to send.

HMRC checks your figures against what contractors reported before it pays anything. When the two agree, the claim moves. When they do not, you are into correspondence, and correspondence with HMRC is measured in weeks.

The fix is unglamorous. Collect the deduction statement every month, reconcile it to the bank, and file the EPS whether or not there is anything else going on that month.

The claim covers a completed tax year. For the last six years you can claim online or by post; anything older has to go by post to PT Operations North East England, HM Revenue and Customs, BX9 1BX, with CIS written on the envelope.

Before you start, make sure every Full Payment Submission, every EPS, any monthly CIS returns you owe as a contractor, and the company tax return are all in. HMRC will ask.

You will need the company name, address and telephone number, the PAYE reference, the corporation tax UTR, and the bank details for the repayment. The figure you are claiming is the total CIS deducted from you across the year, less whatever has already been used against your payroll liabilities.

Two situations let you claim mid-year rather than waiting: the company has stopped trading, or you moved to gross payment status and deductions were taken after the change. Otherwise the tax year has to end first.

If your accountant handles it, they claim through their agent services account. Worth checking they actually do this rather than leaving the balance to roll forward quietly.

The companies that never worry about this run the same routine. Payment and deduction statements come in and get filed as they arrive, not hunted down in May. The bookkeeping records CIS suffered against each invoice, so the ledger total and the statements agree all year. Payroll goes out on time with the EPS attached.

By the time April arrives, the number is already known. There is nothing to reconstruct.

There is a second benefit that owners rarely connect. If you know your CIS position through the year, you know how much of your corporation tax is already sitting with HMRC. That changes what you can take as dividends and what you need to keep back. It is the same principle as forecasting the corporation tax bill a month before it lands: the money is there and the decision is yours.

Construction clients came to us largely by referral, and the reason one of them kept asking a previous firm to move him back to me was simple. He wanted replies and he wanted to be told things before they became a problem. CIS is exactly that kind of thing.

Two points that come up almost every time.

If you trade as a sole trader or in a partnership, CIS works differently. The deductions go against your self assessment liability, and any excess comes back after the return is filed. There is no monthly payroll set-off to use, so timing your return matters more.

If you run a limited company, you cannot claim the CIS back on your personal tax return. The deductions belong to the company because the contractor paid the company. Directors sometimes try, usually after reading advice written for the self-employed, and it creates a mess that takes longer to unpick than the original claim would have taken.

The third question, asked less often but worth raising: if your company is regularly sitting on unused CIS, gross payment status may be worth applying for. It stops the deductions at source and removes the cash flow problem entirely, provided the company meets HMRC’s turnover, compliance and business tests. Whether it suits you depends on your contractors and your own compliance record.