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CIS Deductions

CIS Deductions

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I have a client who's a bit lax in paying over CIS deductions from his subbies to HMRC, all returns are done on time he's just likes holding onto his cash (I know i's not his!)

Apparently some subbies have been told by HMRC that they can't have any refunds that are due until he pays, is this correct or are they misunderstanding - not even sure they've done tax returns for last year. I don't do all his subbies returns but they ones I have done have had refunds that were due.

Any advice on how to deal with 2 irate subbies?

Replies (7)

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By lesley.barnes
25th Oct 2021 14:44

Point them in the direction of the contractor who is holding on to the CIS deductions. I don't know what you can do to make him pay the money over. Is it last years CIS (2020-21)? I don't know if HMRC can withold refunds in these circumstances but I'm not sure what your subbies can do if HMRC don't refund the money. They could hold on to it to do checks if they wanted to.

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By rmillaree
25th Oct 2021 14:52

"Apparently some subbies have been told by HMRC that they can't have any refunds that are due until he pays"
Never heard anyone at hmrc say that ever - issue normally is that those that dont pay also tend not to submit returns.

Note i would expect hmrc to perhaps take a tougher line if they suspect fraud or deliberate tax evasion-avoidance (hmrc 's most sketchy versionref "avoidance")

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Danny Kent
By Viciuno
25th Oct 2021 15:02

Something doesn't sound right- HMRC check what has been reported on the subbies UTR not what the contractor has paid to HMRC. If HMRC are disputing the CIS claims then the CIS hasn't been reported to HMRC on the CIS300s or something doesn't match up. They don't refuse repayment on the basis of the contractor not paying over CIS to them.

Double check the UTRs that the CIS has been reported to.

Unfortunately many subbie arrangements I see are a bit ad-hoc so may not be much in the way of evidence if HMRC demand some.

If contractor supplied CIS deduction statements (which he should have) then the subbies can send them into HMRC to support their claim. HMRC will pay out and chase the contractor themselves based on that.

If they issue invoices, send copies with the corresponding bank statements showing CIS deducted.

Looks like the subbies are not your clients though - I wouldn't get involved. Tell them all the information is on the CIS deduction statements and leave it at that. For all you know they are entering the wrong figures on the returns.

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Replying to Viciuno:
By Paul Crowley
25th Oct 2021 15:32

More like the client has submitted returns that are incorrect
As is wrong year due to cut off or wrong UTR, particularly if subbie has cganged status from co to partnership or to sole trader

This is a client problem not yours
I would be seriously annoyed if client gave out mu num,ber rather than deal with the problem he created
He just needs to give them tax certificates are agree to the submissions

Subbies are the ones that are getting the raw deal here, from your client

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Replying to Paul Crowley:
By Chris Ash
25th Oct 2021 15:45

Hi Paul

Thanks for comments, client returns are correct, I prepare them from bank statements and file them so it isn't that.

I have adressed issue with him though about giving my details to subbies I don't represent though.

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By Chris Ash
25th Oct 2021 15:11


Thanks all

I suspect that the subbies haven't filled in tax returns correctly so as advised I'm not getting involved with them unless appointed as their agent.

I didn't think it sounded right that refunds were refused especially as the ones I've done have been refunded.

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By lionofludesch
25th Oct 2021 16:00

Here's the weakness of the CIS system - it's not always the subcontractor who's a bit careless about paying his tax on time and complying with the regs.

I've always found, in practice, that HMRC will accept that tax deductions should be credited against the subcontractor's liability but it's often just that bit harder to prove that they were made.

How a subcontractor is expected to enforce a debt to HMRC is beyond me. What's he supposed to do ? Make a money claim on HMRC's behalf ?

It's HMRC's debt. It's up to them to get off their collective fat backside and enforce it.

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