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Ltd company, falls short of Gross CIS criteria but has no CIS/PAYE liabilities to offset. How can we get this money back to use for the business?

Ltd company,falls short of Gross CIS criteria ??

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I will try to give you the full specifications on the scenario,with a question of what would you do/suggest and has anyone had any similar experience with this. All comments, humour and miracle answers welcome! :)

Client, limited company, 2 directors. Engineering business falling within CIS. Registered as CIS subcontractor and is currently suffering 20% CIS tax on all income. The company does not use subcontractors and there is only one director being paid a small salary with no tax/NI liabilities, so nothing to offset against the CIS tax suffered. The expected annual turnover is £53,000. Unfortunately as there are 2 directors they do not meet the £30,000 turnover per director and cannot apply for Gross CIS status. We thoroughly track the company accounts and can see that a fair share of the CIS suffered will be payable as corporation tax and the rest as retained earnings available as dividends. The fact that a large portion will be for corporation tax is besides the main point which is the company cannot use those funds as cash to invest and grow the business. (Forgive me I thought the whole point was to encourage business growth which in turn benefits the tax man!) So I start my attempt to save the world (ok, be a good accoutant and help my client, but it's practically the same)

I take a gamble and very hopeful I call HMRC CIS helpline. They inform me that there is no way to get around the turnover requirement for Gross status but the company might be able to ask for interim refunds rather than wait until the end of the tax year. They referred me to th Business Payment Support Team.

I call the Business Payment Support Team, who at the time were unable to help me as we had applied for the PAYE scheme but hadnt received the letter with the references. (Why the needed those I don't know as you can register as a subcontractor without them, but hey ho HMRC says so!)

After receiving the PAYE scheme references I call the Business Payment Support Team again. I explain the scenario and my first call to the CIS helpline. They simply say "i don't understand, it's over my head", "we only deal with payments here". He refers me back to CIS helpline.

Call CIS helpline. Full scenario and story explained. This guy understands what I am saying and the dilema that the company is restrained by not having access to these funds, however he said "I've never heard of interim refunds and this would be something that you would have to discuss with the Employers helpline as they process the refunds".

So I call the Employer helpline. Again even longer story and scenario relayed. The woman said "I have worked here 14 years and I have never heard of an interim refund ever. You have to wait until the end of the tax year". After I reiterated my point about the "financial chokehold suffering CIS tax has on my clients business", she has given me the address for the Employers Office, but she did add she doubted they would offer a solution.

So I will write my letter, but before I do I wanted to get some other options and experience on this please. Again all comments, humour and experience welcome and thank you in advance.


Replies (2)

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By stratty
13th Jul 2016 16:56

What is the company engineering?

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Replying to stratty:
By Ashlea
13th Jul 2016 17:41

Engineering contractor, specialist pipe fitting. Works on a contract basis for big projects.

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