PAYE & CIS netting off

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
Does anyone know if you can still do this?

For example - month 7:

PAYE/NICs owing of £100.00
CIS tax suffered of £50.00

therefore only pay over to HMRC the £50.00 owing.

Off to see a new client tomorrow who is "in a bit of a pickle....." :shock:

Claudia
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Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    I don't know, but I would have thought so if both are under the same PAYE reference and using the same paying in book. There must be some information on that somewhere on the HMRC website!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Mind you, not if you are talking about CIS tax suffered under the CIS4 voucher. That can only be claimed at the year end on production of the vouchers!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Woman at Revenue says you can under CIS4 - but she couldnt explain how to do it in practice - assume that fill in the top bit of the slip from the yellow book, and in the payment bit at the bottom just put the amount being paid - like when you take off the £250 bribe - sorry incentive :roll:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Surely not if the tax is taken from the "builder" on a voucher though!
    How has your client accumulated this "credit"?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Time will tell - not off to see him until tomorrow - dont even know the legal entity of the business!

    In the good ol' days though you could net off CIS4 against PAYE etc paid to an employee.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off
    claudialowe wrote:

    In the good ol' days though you could net off CIS4 against PAYE etc paid to an employee.


    He has done work for a contactor and been issued with a CIS 25 certificate showing his deduction?

    Claudia is it this you are trying to net of against PAYE?

    If that is the case then he won't be able to do that because it is the contactor that is liable for paying his tax to the Revenue.

    I'm confused as to where your client gets his credit to offset against PAYE?

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Confused? Me too?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    OK - here goes -

    Jo Bloggs as a subbie does work for a contractor XYZ Ltd under CIS4 - earns say £1,000 netted down to £820.

    Jo in turn has to pay his employees - and pay over say £200 to HMRC in PAYE/NICS.

    You used to be able to pay over £200 (owing) - £180 (CIS4) = £20 payable to HMRC.

    It is only where someone is both contractor/employer and sub-contractor at the same time.

    Any less confused?

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off
    claudialowe wrote:
    OK - here goes -

    Jo Bloggs as a subbie does work for a contractor XYZ Ltd under CIS4 - earns say £1,000 netted down to £820.

    Jo in turn has to pay his employees - and pay over say £200 to HMRC in PAYE/NICS.

    You used to be able to pay over £200 (owing) - £180 (CIS4) = £20 payable to HMRC.

    It is only where someone is both contractor/employer and sub-contractor at the same time.

    Any less confused?

    Claudia

    Jo is the subcontractor to the contractor paying his own employees?

    He has been deduct tax yes but he can't use the "voucher" to net off against his own EES liabilty. If he does how does that deduction get paid?

    The contractor will pay it across and JO will deduct it again from his own PAYE payments. The Revenue don't get their tax.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    I'm sure we've done this too Claudia, I'll check the circumstances at work tomorrow and report back.

    Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Yes but Dean Jo owes revenue £200 and Revenue owes Jo £180. Agreed?

    Normally, when Jo completes his SA/CT or whatever his entity is - tax owing = say £2000 - you then deduct the £180 CIS4 and only pay £1820.

    It is only a timing difference - being able to do it on a monthly basis rather than at year end - ie it helps Jo's cashflow.

    Please someone tell me I haven't totally lost my marbles :wink:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off
    claudialowe wrote:
    Yes but Dean Jo owes revenue £200 and Revenue owes Jo £180. Agreed?

    Normally, when Jo completes his SA/CT or whatever his entity is - tax owing = say £2000 - you then deduct the £180 CIS4 and only pay £1820.

    It is only a timing difference - being able to do it on a monthly basis rather than at year end - ie it helps Jo's cashflow.

    Please someone tell me I haven't totally lost my marbles :wink:

    Claudia

    I do see where you are coming from....

    If his liabilty at year end is X and has nothing to put against it (because its been taken monthly) wouldn't he have a payment on account to make?

    Your client then comes back and says.... "I never pay that each year" :roll:

    I think they'll get you either way. :(

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Thanks Annette - I am really beginning to think that I have lost it totally - I know I used to do it - and woman at the Revenue "seemed to think" it was OK - but dont want to give a new client duff information :shock:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Hi Dean

    Yes he would have to make POA - but it would help his cashflow enormously.......

    It is not avoidance/evasion, but just not having to pay out twice (in effect) and then wait a year to get any back.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off
    claudialowe wrote:
    Hi Dean

    Yes he would have to make POA - but it would help his cashflow enormously.......

    It is not avoidance/evasion, but just not having to pay out twice (in effect) and then wait a year to get any back.

    Claudia

    Well you know the full details. I just like to offset it at the year end and be able to say "you are due x refund this year" :lol:

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off AND FREE CPD

    CIS tax suffered can be used to reduce the net liability each month.

    CIS tax that you deduct from your subcontractor must be paid at the same time as any other Income Tax liability and is added to the payslip from the yellow booklet.

    CIS tax that has beeb deducted from your income is deducted from your liability on the payslip. If this results in a refund being due, then precede the amount with 'R' as you would if your employees' tax rebates were more than the tax due.

    At the end of the year, the CIS tax deducted and the CIS tax suffered are both included on the form P35 and the result is the net liability to/from HMRC.

    The instructions that come with the CIS vouchers help.

    But bear in mind that, from 6 April, 2007, there will be no vouchers. They are being replaced with a statement issued by the contractor to the subcontractor. HMRC are currently running free courses on this at the moment. AND THEY ARE CLASSED AS CPD, which means you get 2 hours CPD for free.

    Mike
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    I disagree. The end of year form for CIS is the CIS 34, not the P35. How can they tie together? One is for CIS deductions, the other for paye deductions!! :evil:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    TC, you have obviously never completed a P35.

    The information on the CIS36 (not CIS34) is for payments made to subcontractors.

    Where a company also runs a PAYE scheme, they are required to show CIS tax deductions on the form P35 Box 8.

    Box 31 on the P35 is for reclaiming CIS tax deductions suffered.

    Page 10 of [url]
    http://www.aat.org.uk/servlet/file/CYE_questions_June_2006.pdf?ITEM_ENT_ID=20063&COLLSPEC_ENT_ID=34[/url], the June Payroll CYE exam, shows an example of the P35 if you want to check.

    I'm sorry if this does not suit your current knowledge, TC, but these are the facts. I'm sure you will understand once you check out the link above. Also, paragraph 1.12 of http://www.hmrc.gov.uk/leaflets/ir14-15cis.htm, the HMRC document, shows how this works. You might find it helpful to read this.

    Michael
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Hi TC,

    Michael is correct in his reply (though it is common to relate CIS deductions purely with CIS 36 which is the additional return) - please see the example P35 at the following site (see right at the bottom of the P35). The confusion is not helped by the revenue's constant changing of methods and introduction of more and more form filling!

    http://www.hmrc.gov.uk/ebu/p35-2005.pdf


    Kind regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Michael and Steve

    Thank you both so very much - I knew (hoped?!) that I wasn't going mad - but wanted re-assurance from others - a Revenue "well I think" wasn't really good enough for me.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    No problem at all.

    Regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Claudia,

    Try to get hold of the Employer's Helpline number for your area. They are a very good source of specialised help. Talking to the general HMRC doesn't always help. You need to talk to the specialists.

    Michael
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    It was the Ers section that I spoke to, but no-one seems to know anything about CIS (and I have had this problem before as well with other CIS queries).

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    CIS deductions suffered can only be offset against PAYE if the deductions have been suffered by a company. HMRC have produced a form to keep track of the monthly offset - CIS132:

    http://www.hmrc.gov.uk/cis/cis132.pdf

    Here is a link to HMRC's website explaining the offset rules:

    http://www.hmrc.gov.uk/cis/section4g.htm

    And confirmation that this will be the same when the new rules come into play next April:

    http://www.hmrc.gov.uk/new-cis/payments.htm

    Regards
    Tom
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    Thanks Tom - brilliant to finally have everything in black and white.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    It must be halloween! I've just been asked this same questions today! :shock:

    SPOOKY! :twisted:

    So big thanks you Claudia and the team :lol: I must confess I didn't know you could do it monthly. I thought it was an annual thing.

    I've pointed out the above to my client and he would prefer the improved monthly cash flow.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    And where do you want us all to send our bills :wink:

    Mine can go out by broomstick tonight if you want.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    lol

    I'll put a credit to your account and reduce my WIP ledger :lol:

    Anyone got any trick or treat stories they won't to share? Am I getting old or are kids just no longer "Sweet" anymore! "Money" please :shock:

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off

    I managed to p*ss off my youngest (8 years) by saying that she didnt need to dress up to scare the neighbours - after she decided to attack her fringe over the weekend :lol::lol::lol:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PAYE & CIS netting off
    Am I getting old or are kids just no longer "Sweet" anymore!

    http://news.uk.msn.com/Article.aspx?cp-documentid=1183692

    Scott.

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