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CIS contractor overpaid - payroll want gross back?

Do I have to pay back more than what I have received???

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My husband is a sub-contractor carpenter, working through an employment agency and receives payments through a third-party payroll company who take a £16 margin each week. He is registered and makes payments through the CIS tax scheme. In the last week of the 2019-20 tax year (ie. last week) his agency wrongly instructed the payroll company to pay him. The payroll company are now asking him to repay not just the money he actually received but also the 20% CIS tax AND their £16 margin.
Advice please would be much appreciated. He is not currently working because of COVID-19 and it is very difficult to be out of pocket for something which is totally not his fault.
Many thanks
HB

Replies (7)

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By lionofludesch
06th Apr 2020 22:30

Who do the agency work for?

Your husband or the main contractor?

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By BanksBaker
06th Apr 2020 23:00

The employment agency work for the main contractor I guess - they get their commission from them I suppose.
The payroll company earn a margin which my husband pays - the payroll company work under instruction from the employment agency however.
He is not disputing paying money back which he has actually received, but it was the employment agency who wrongly instructed the payroll company to pay him. I also don’t understand why they are asking him to pay the CIS tax back and the payroll margin - he hasn’t received either of these?
Any advice would be much appreciated thank you

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By Sandnickel
07th Apr 2020 07:00

Your husband needs to pay the amount that he received, nothing more.

The CIS will be dealt with through HMRC, it should have been sent there and therefore will be refunded to them.

The margin is between the payroll company and the agency. It's not up to your husband to pay this.

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Replying to Sandnickel:
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By BanksBaker
07th Apr 2020 07:52

Sandnickel wrote:

Your husband needs to pay the amount that he received, nothing more.

The CIS will be dealt with through HMRC, it should have been sent there and therefore will be refunded to them.

The margin is between the payroll company and the agency. It's not up to your husband to pay this.


Thank you so much for this - can I just clarify though... does it make a difference that he received the overpayment in one tax year (2019-20) and is paying it back in a different one (2020-21)? This is the reason that the payroll company are saying he needs to return the gross amount.
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Replying to BanksBaker:
By Duggimon
07th Apr 2020 08:13

No, it makes no difference, he's paying it back because he hasn't properly received it, it doesn't matter when it was he hasn't received it.

The rest is for them to sort out, they'll probably need to resubmit filings for the previous tax year which they're trying to avoid.

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Replying to BanksBaker:
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By Sandnickel
07th Apr 2020 08:17

No it doesn't matter at all.

Send the money you received in your bank back to them and leave it at that.

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By BanksBaker
07th Apr 2020 08:20

Thanks for answering so clearly

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