I have just concluded a long running tax investigation and the client has made a contract settlement with the Inland Revenue. Part of the settlement related to tax and NI due on casual labour.
Where there is a PAYE investigation I understand that any tax paid will be an allowable deduction in the trader's accounts as it is effectively part of the gross wages charge. Is the same true where there has been a wide ranging investigation and tax is paid under a contract settlement? In arriving at the overall settlement figure the Inspector calculated that part which was due on the casual wages although of course the final settlement does not refer to this
Paul Nicolson
Replies (2)
Please login or register to join the discussion.
Peter, you took the words right out of my mouth!
I would just add that you need to be quite firm in your committment to make the claim, so do not be fobbed off if you are first told "no".
Should be agreed as part of negotiation
The amounts paid over in respect of PAYE/NICs are allowable as an expense in the year in which they are actually paid to the IR. As part of the settlement negotiation it should be agreed with the Inspector exactly what amount may be disallowed. Given, you say, that the final settlement does not make specific mention of a PAYE element I would ask the Inspector to agree in writing as to how much may be treated as allowable; if you don't get this you may encounter problems should a new Inspector pick up next years accounts and find that his/her predecessors notes are not all that they could be!