Ltd Co - CIS tax

Hi everyone,

I have a client who is in the construction industry (a Limited company) and gets stopped CIS from his customers. As he is a contractor and takes on subbies he also deducts CIS from them. He is not paying over these deductions to HMRC as they are netting off this liability with what he (the company) is being dedcuted (which is common for Ltd Co's).

When I have dealt with this in the past it is not as a company so the client has always paid over the CIS stopped from the subbies to HMRC. When I do their tax returns I then simply account for the CIS tax that the client has in turn been stopped.

However how do I account for the CIS stopped from the company? Do I provide for the full amount in the CT600 and then deduct the amount due to subbies in the year or do I net them off? Also HMRC don't send statements to show the current 'net' postion although he will always get stopped more than he owes (otherwise he wouldn't be making a profit).

The company doesn't have PAYE bills so cannot deduct the excess from this.

Some practial advise from those of you who are familliar with this situation will be great. I suspect it is a fairly straightforward answer.

Cheers!

:)

Comments

  • peaman
    peaman Registered Posts: 123 ? ? ?
    Not sure if I understand the query about the CT600?

    At the year end the CIS tax debtor just sits on the balance sheet (CIS tax suffered less CIS deducted from subbies).

    Even though there is no PAYE, HMRC usually will still issue a P35, on which you enter the CIS figures and this will show the CIS tax owed to the company.

    You can then write to HMRC and claim the P35 repayment (they don't automatically refund this any more!) or you write and ask them to offset the overpayment against any o/s CT.

    I don't believe you make any entry on the CT600, unless I have misunderstood the question!
  • stevo5678
    stevo5678 Registered Posts: 325
    Thanks for that.

    No you understood my question, I thought that somehow it could be relieved as part of the corporation tax liability.

    I need to sort via the P35 regime then.

    Many thanks!
  • jamesm96
    jamesm96 Registered Posts: 523
    Yeah I'd absolutely agree with Precise Tax; no entry on the CT600, it's just a P35 which you need to do (which you'd usually also want to use to report the Director's salary on with a P14).

    You can write to the HMRC Employers office to request a repayment but it'll take months of letters backward and forward; they run appalling backlogs in that office. I'd highly recommend having the CIS set off against the Corporation Tax if there is any, and send the request to the CT office rather than the PAYE office; it'll get dealt with much quicker that way!
  • stevo5678
    stevo5678 Registered Posts: 325
    jamesm96 wrote: »
    Yeah I'd absolutely agree with Precise Tax; no entry on the CT600, it's just a P35 which you need to do (which you'd usually also want to use to report the Director's salary on with a P14).

    You can write to the HMRC Employers office to request a repayment but it'll take months of letters backward and forward; they run appalling backlogs in that office. I'd highly recommend having the CIS set off against the Corporation Tax if there is any, and send the request to the CT office rather than the PAYE office; it'll get dealt with much quicker that way!

    Thanks that's great. The other option sounds a bit of a farce. It would be alot easier if HMRC sent statements of the net position when a client has suffered more than what's been deducted. Especially since HMRC hold all the info.
  • peaman
    peaman Registered Posts: 123 ? ? ?
    Yes, I would agree with James, it is usually easier and quicker to offset against CT. We write to the PAYE and CT offices, so both departments know about the offset.

    Whether you ask for a repayment or offset against CT may depend on the date that the CT is due and when the repayment will be issued. You may end up in a position in which the overpayment is allocated against CT, but it just sits there in the clients CT account for 10 months, which will be farcical!

    HMRC can move at a glacial pace when issuing P35 repayments, but it will be slower when any PAYE/NI is involved as after you write to them to request the repayment, they will send out a P35D to ask why the overpayment occurred. When the overpayment is clearly because of CIS (because only CIS figures are on the P35) they don't do this, so the repayments are usually a bit quicker.

    Any repayment/offset will only be made once HMRC have agreed the figures on the P35 with their records. An HMRC inspector told me that they don't usually get through checking the CIS payments entered on the P35 until some time in June.
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