CIS Levy payments

Lucy_M

Hi,
I am looking for some advice please...
I have a friend who I am helping to sort out her partners tax affairs, he is CIS registered but his employer has been deducting a contribution towards the levy scheme from his payments. From the information I have read this is not allowed (in-fact HMRC's PDF recommends seeking legal advice..!) I would really like to confirm this before I mention it to them, obviously. He has not completed a tax return for 4 years, will HMRC honour re-funding of over-payments this far back?
Thank you so much, in advance, for any help!

Best regards,
Lucy

T.C.

I love CIS ! Not sure of your question, but if a contractor (not employer) has been deducting CIS tax from his earnings, then he should have been filing self-assessment tax returns as a self-employed subbie. If he is not registered as self-employed, then he could have problems. He needs to get this sorted asap.

Lucy_M

Thanks T.C sorry if my post is confusing, he's a subbie, his payment remittance from his contractor shows a levy contribution deduction at, if my memory serves me right, about £0.0015 % of earnings, is this allowable? He is registered as self employed, just hasn't sent a return in, we are on the case to get it done asap! Thanks

T.C.

What do you mean by a levy contribution? Levy on what to whom? If you mean a training levy, then yes, this is usual, and an expense.

Lucy_M

It does say 'training levy contribution' now I think about it but the pdf regarding the CIS treining levy scheme states that sub-contractors shouldn't have to pay anything? If it's usual though then I guess I won't mention it... Thank you for taking the time to reply! Lucy

Lucy_M

It does say 'training levy contribution' now I think about it but the pdf regarding the CIS treining levy scheme states that sub-contractors shouldn't have to pay anything? If it's usual though then I guess I won't mention it... Thank you for taking the time to reply! Lucy

Gem7321

TC I'm fairly certain the legislation has changed and that the levy cannot be passed on to subbies unless it was agreed by the subbie in writing. I may be wrong though!

T.C.

I don't think subbies HAVE to pay, but most agree because it is a small amount and it keeps the contractor happy. After all the subbie wants the work from the contractor and this is a very small price to pay. It is an allowable expense though.

Lucy_M

That sounds about right, thanks both of you! So do you mean it can be claimed on his tax return as an allowable expense? In which case it is a bit of a mute point I guess...
Really appreciate the time xx

Gem7321

Just for info HMRC have recently released this statement http://www.hmrc.gov.uk/cis/citb-note2-mar14.htm

Lucy_M

Thanks Gem7321!
Does confirm that the levy should not be passed on but as T.C. said, it's difficult to avoid if the subbies want the work...