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Tony talks: CIS refunds

5th Nov 2013
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In my inaugural blog, I'll be talking about the persistent issue of limited company clients' CIS refunds.

It's been a recurring issue for a lot of accountants for years now, and we'd like to know why and get it resolved.

In preparation for my meeting with HMRC about the matter next month, I'm asking AccountingWEB members who also experienced the issues to comment below with any suggestions as to what to bring to them. 

My first video blog is available below:

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Replies (7)

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Jennifer Adams
By Jennifer Adams
05th Nov 2013 13:01

Can I start?

As Tony mentions in his blog Rachael wrote an article pulling together comments made by members - for anyone interested here is the link...

https://www.accountingweb.co.uk/article/hmrc-cis-refund-issue-persists/5...

>>> as Tony says - it is getting very annoying, time consuming and distressing with no real answer to the reason why. If anything can be done that would be great!

How about trying to get Margaret Hodge involved?

Jennifer Adams

Associate Editor

PS Great Blog Tony - great idea!

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By JGracias
05th Nov 2013 14:04

cis refund

listening to Tony. My client (partnership) has been waiting since April;HMRC response checking security;

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By tom2another
05th Nov 2013 14:13

Insanity Of HMRC

To my mind the insanity is the insistence of linking the CIS tax to PAYE for limited companies.

CIS tax is a deduction on account of the tax libility.

So for self employed it's set against their Income Tax, so for limited companies it should be against their Corpoaration Tax. This used to be possible when it was SC60 tax and should be again. To make it offset against PAYE first is a nonsence. It should offset against corporation tax first & then as an alternative PAYE - which ever is benficial to the tax payer. (after all we are paying thier wages, and they are meant to be our civil servants looking after us - not the otherway round!!)

Also with SC60 tax the SC60 was the reciept and proof positive that the tax was deducted, and although the Revenue would try and resist making repayment if the contractor had not paid over the tax, it was possible to point out that that was not a requirement, and the collection of the tax was down to them, which resulted in the offset whether or not they had got the money. The move over to CIS has made thier life easier - not ours - with out any benefit to us.

Tom

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By angusnicolson
05th Nov 2013 19:32

Companies with no employees....

Director runs a small niche contracting business, with no employees, and also works via PAYE elsewhere.  Turns up in the office in November with the 31 March accounts just ahead of the Companies House deadline only for you to find that he has suffered a CIS deduction in May 2012.  To get relief you need to register him for PAYE, submit a late P35, explain why a refund is due as it goes through 'security checking', appeal the late registration and late filing penalties for nearly 20 months, and then try and fee for this work.  Yes, and the fee for the future NIL RTI returns just in case he ever undertakes CIS work again.  Could it be more unwieldy??

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Chris M
By mr. mischief
05th Nov 2013 21:34

RTI

Surely if RTI is to mean anything then CIS limited companies who are owed over £1,000 as per RTI should at least get a quarterly refund?

Why the Government should listen:

The angle to play with Hodge and co. is that this slow pay - apart from being totally against Government policy as per spouted at PMQs etc. - has in my view made the construction recession 2009-2012 worse than it would have been if HMRC did not deliberately slow pay CIS refunds.

Given that both parties have dire records at housing starts, and the cost of housing is a major factor in the squeeze on living standards, politicians of all parties know there are votes at stake on this issue.  With the politicians that is the angle to play and not "motherhood and apple pie" about the evils of Government slow pay.

Short term process improvement:

In the meantime, the onus should be on HMRC to show that a refund is not due.  The farce of having to send them numerous documents - most of which they've had electronically - should be outlawed.  Fine if they send us their records and say "We can't make the refund because of these gaps."

We can then look at the gaps.  In addition, only the element of the refund relating to the gaps should be held up, not the wholesale slow pay as at present.

At the moment CIS is the most jobsworthy aspect of dealing with an immensely jobsworthy organisation, which is by a country mile the worst aspect of my job.  On a very very bad day the banks come close to HMRC for silly jobsworthy stuff, but they never quite match them.

 

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By refs8
05th Nov 2013 22:15

Gross status
We have decided to look at gross status for as many of our limited company clients, only time will tell if it is the right decision, but we have become fed up in waiting for client refunds. We will see if our applications are accepted first. I suspect we should have done this along time ago.

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Chris M
By mr. mischief
06th Nov 2013 07:20

One last thing

Well to be honest it might not be the last thing, HMRC really bug me but on CIS more than anything!

Having just thins minute electronically submitted a 5,139 CIS tax suffered EPS for period 7 year to date for a one-man band builder who unfortunately does not qualify for gross status, in my view there is

NO EXCUSE THIS YEAR

for slow pay of refunds once the tax year has ended in April.  If they are going to query anything in May, the latest month they should be entitled to query at that stage should be February.

This year HMRC are getting this information in full every month.  If RTI is to mean anything other than just a load of extra costs for everyone, HMRC should be reconciling everything - or at least trying to - every month.

In fairness, there is evidence of this happening in my client base on PAYE - more sensible tax codes coming out sooner, for example.  So I hope they are not just sitting on their chairs in CIS towers and expecting us all to go through the same silly farce again this year on CIS.

I for one will immediately escalate to a Complaint Case any query which relates to month 9 or earlier and I entreat everyone else who deals with CIS to do likewise.

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