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Backdated CIS taken from subcontractor

Never had this scenario before-client panicking right before christmas

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the client has worked on wind farms (They do indeed fall into the scope of CIS and we mentioned CIS on the invoices but it was ignored) for 6 months with no CIS being deducted now this months pay has had all the previous months CIS taken leaving him with nothing.

he is obviously panicked and hoping I can somehow help reclaim the money from the contractor saying they should just start from this month as it was their error and it shouldnt be backdated. Is there any basis for this that i can use to support the claim? Many thanks in advance

Replies (13)

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By doubletrouble
30th Nov 2021 10:48

Has your client not been putting aside money to pay the tax on the previous months Invoices?
This should compensate for the money held back now as it may not be owed

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By Paul Crowley
30th Nov 2021 10:58

If SEISS was claimed then there should be already some tax put aside, that did not come with tax deducted
The problem is that Subbie knew he needed to put aside some tax money
Bigger problem is if subbie is paid weekly

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Replying to Paul Crowley:
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By rdmacc
30th Nov 2021 11:07

I’m confused, no one mentioned SEISS

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Replying to rdmacc:
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By Paul Crowley
30th Nov 2021 11:39

If client claimed SEISS then he had a serious amount of untaxed income, the tax for which is payable 31 Jan. If so there should be some tax money sat in his reserves
This year every subbie that used to get tax refunds has tax to pay instead.

Your client knew 20% needed to be notionally put aside (see first responder)
Hence this is just a cash flow timing issue.
It can only be a problem if tax money is not put in reserves

I can see no point in trying to get contractor to effectively lend the subbie yet more money

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Replying to Paul Crowley:
RLI
By lionofludesch
30th Nov 2021 16:22

Paul Crowley wrote:

If client claimed SEISS then he had a serious amount of untaxed income, the tax for which is payable 31 Jan. If so there should be some tax money sat in his reserves

Aye - but he'll still need to pay that on 31st January.

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By jwill76
30th Nov 2021 12:22

Has the contractor failed to submit CIS returns for 6 months and now playing catch up?

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Replying to jwill76:
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By rdmacc
30th Nov 2021 12:31

it turns out they were completely confused by the CIS scheme and are now playing catch up

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By Leywood
30th Nov 2021 12:39

So the client did not own up to receiving too much in earlier months, now wants that to be magic'd away.

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Replying to Leywood:
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By rdmacc
30th Nov 2021 12:47

Seeing as it’s up to the contractor to ensure the cis is deducted then it wasn’t really his problem.
The main point I’m trying to make that everyone keeps skipping to get to their point is Are they allowed to backdate these deductions. In fact just forget it, it’s a frustrating experience asking anything on here

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Replying to rdmacc:
By williams lester accountants
30th Nov 2021 13:19

Yes.

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Replying to rdmacc:
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By Leywood
30th Nov 2021 13:28

It is his problem.

Yes they can backdate.

If you think it is such a problem getting answers on here, why dont you help out more? It is a problem folk expecting a one way street.

Thanks (3)
Replying to rdmacc:
RLI
By lionofludesch
30th Nov 2021 16:25

rdmacc wrote:

Seeing as it’s up to the contractor to ensure the cis is deducted then it wasn’t really his problem.
The main point I’m trying to make that everyone keeps skipping to get to their point is Are they allowed to backdate these deductions. In fact just forget it, it’s a frustrating experience asking anything on here

Mmm - four questions, four answers seems to be your record.

All the answers on threads you started.

Yet you whinge about the difficulty in getting an answer from folk.

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By doubletrouble
30th Nov 2021 13:14

The contractor has realised that they made a mistake and are now trying to rectify it, yes they can withhold the tax from the payments made now as that is what is needed to correct the mistake.
Yes it is down to the contractor to apply CIS correctly but if they realise that they have made a mistake then they are entitled to try and resolve this by asking the sub contractor to return the money wrongly paid.
Your clients problem is they are still working there so the contractor can just backdate the deductions.
Still not sure how this affects your client if they have been putting aside money for tax.

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