CIS tax time limit

CIS tax time limit

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I took on a client last year who had been both a contractor and a sub-contractor.  He was several years behind with his tax returns and was also about 12 months behind with his CIS returns.  I got him up to date with everything and he was due refunds for each of the years but owed a fair amount of CIS tax and penalties.  After it had all been sorted out, he would have been due approximately £2000 back.  However, HMRC have now discovered an old PAYE scheme under a different reference number which relates to the 2001/2002 tax year and which has an outstanding balance of £4800.  They are witholding the £2000 to offset against the old debt. 

My client says that he has not been contacted about the old PAYE scheme and was not aware that there was an outstanding balance.  Is there a time limit in which HMRC have to chase the debt, i.e. can we now ask for it to be written off?

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By Carolynne
15th Apr 2013 15:37

CIS tax time limit

I have a client, who ran a CIS scheme, and for the first time, was owed money at the end of 2012 tax year.

Only when the P35 went in, did HMRC write a letter (not even mentioning the tax due back to him), that he had a couple of late returns going in for P35s in 2003 and 2004 and that he owed them (I can't remember but it was around £2,000). 

No letters have ever been received by my client for the penalties, and as we know from the past, there have been complaints about interest or penalties being increased further, when the client could not have paid the first bill, having never received any notifications until several years after the event from HMRC.

When I Phoned, they told me that I would need to provide proof that these returns went in on time.  In this case, the accountant has passed away, so that was going to be a non-starter.

Sadly, I don't know time limits, I suppose they will choose to go back to the year dot, but we an only go back so many years if the shoe is on the other foot!

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