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CIS reclaim for company

CIS reclaim for company

Company subcontractor has CIS deducted from some of their income. This is related to a company with a year end that spans 5 April 2011, with some of the CIS deductions related to income pre 5 April 2011.

Current information indicates no PAYE scheme in place at 5 April 2011 and hence no P35 submitted for that tax year end.

Questions as follows

  1. Is there any other way of reclaiming the CIS tax deducted other than through a PAYE scheme?
  2. If not, can a P35 for the year ended 5 April 2011 be submitted now, solely to reclaim the CIS deducted? As this would obviously now be an extremely late submission, would the normal P35 penalties apply? If so,is there any legal precedent for getting them waived?

Replies

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10th Feb 2012 15:37

Answers as follows
Yes, but you have to write to HMRC to get it deducted from the corporation tax liability.  Have a look at this recent thread.  I am not sure if you can ever get a straight refund other than via PAYE.If the company had no employees paid above the NI LEL (£5,044 in 2010/11) or who had another job elsewhere, whether in April 2011 or now, there is no legal requirement to register for a PAYE scheme or to file forms P35 & P14.  Absent a legal requirement to file, there can be no late filing penalty.

Thanks (1)
10th Feb 2012 16:33

Write to HMRC and ask for the CIS to be set against the CT liability, HMRC will not like this as they have decided to departmentalise their role. I was involved in a case in 2008 where there was a PAYE repayment of over £50k due to my client who also had an £84K CT liability which fell due in October. The Co paid the balance and asked for the CIS rebate to be set against the CT liability HMRC refused stating that the PAYE had not been finalised by them so at that time no repayment was due. The case ended up in Court as HMRC issued proceedings for recovery the following March. The Judge threw it out stating that in his view and in the view of the public HMRC is HMRC and not a conglomeration of departments he considered that there was no debt as HMRC were holding the same sum as they were demanding and it was due to their inefficiency that the PAYE position had still not been dealt with. When it was eventually set off HMRC let the interest and penaltes stand, until I asked them to take it back to Court to see what the Judge says.

Thanks (1)
10th Feb 2012 16:47

Thanks for responses

I had seen the thread you linked to Euan. I'd read the responses as saying that you need a PAYE scheme in place, with a P35 showing the refund due, before you could claim the CT offset. Thanks for clarifying this is not the case.

I can confirm no employees, including directors, were paid any wages up to 5 April 2011, let alone anything above the thresholds.

Is there any way you could pass on a case name for your successful result ccassociates? It would be handy to be able to quote a case in which HMRC have been defeated on this point if they take the same stance in this case.

Thanks (0)