Offsetting CIS deducted against CT liability

Offsetting CIS deducted against CT liability

Didn't find your answer?

I wonder if someone can help me.

I know that you can make a claim fro a CIS rerfund where deductions from income exceed your PAYE liability.  

As these are taking so long is it possible to ask HMRC to offset against the CT liability instead?  In the client I am currently dealing with, CIS is £7,500 and CT (due at the end of this month) is only £6,200.  Do I stand a chance?

We have written and asked for a refund but, as usual the wheels just grind to slowly and client is, not surprisingly, not too keen in giving HMRC even more money.

Thanks

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By DMGbus
11th Dec 2015 10:54

TTP arrangement alternative

A "Time To Pay" (TTP) arrangement might be faster implemented.

If the request to offset CIS overpayment against CT has not been actioned by say 20th December 2015 (for a 1st Jan 2016 CT payment) then I would then contact the TTP helpline and explain the following:

The company has unexpectedly hit a cashflow issueThe cashflow issue is caused by a debtor unexpectedly taking too long to payThe debtor is HMRC PAYE sectionTherefore request to defer INTEREST FREE the CT payment due until such time as the CIS repayment is received

 

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By v.knazevs
11th Dec 2015 11:06

Can do
https://www.gov.uk/government/publications/construction-industry-scheme-...

Just make sure to send a letter to office dealing with CT to advise why you are not paying and quote Helpcard. Another request letter should go to CIS Office.

From experience - set off is also not the fastest process, but then our CIS tax suffered (after PAYE and CIS liability) is c 100k.

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By Ruddles
11th Dec 2015 11:07

You can ask, but there is no statutory authority for such an offset - I have seen such applications both accepted and refused. If refused, there is probably not a lot you can do about it. The only statutory authority allows HMRC to offset a CIS refund due against certain unpaid CT. But this relates only to CT for accounting periods ended before the relevant CIS payments.

So, is the £7.5k refund due for 2014/15? If so, HMRC should not offset the amounts. If you're talking about an excess for the current year, then you cannot apply for a refund (or offset) until 6 April 2016 at the earliest.

But, no harm in asking.

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By DMGbus
11th Dec 2015 13:13

Legislation (as was current 2009) RIGHT of set off

Finance Act 2004 said: it is first PAYE/NIC/CIS (relevant liabilities) and after that Corporation Tax if any is due. Section 63 FA 2004 subsection 3 says : (treatment of sums deducted :)
(3) If the sub-contractor is a company—
(a) a sum deducted under section 61 and paid to the Board is to be treated, in
accordance with regulations, as paid on account of any relevant liabilities of the subcontractor;
(b) regulations must provide for the sum to be applied in discharging relevant liabilities of the year of assessment in which the deduction is made;
(c) if the amount is more than sufficient to discharge the sub-contractor’s relevant liabilities, the excess may be treated, in accordance with the regulations, as being corporation tax paid in respect of the sub-contractor’s relevant profits; and
(d) regulations must provide for the repayment to the sub-contractor of any amount not required for the purposes mentioned in paragraphs (b) and (c).

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Just maybe things have moved on since the above 2004 legislation which was still current at least in 2009.

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By Ruddles
11th Dec 2015 13:26

DMGbus

You need to read Reg 56

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Replying to Smokoe Joe:
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By Paul Hawes
01st Nov 2018 12:36

Post is 3 years old.

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