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offsetting cis tax

offsetting cis tax

I am looking for some help please.

A limited company is looking to obtain CIS gross status. I am aware of the 3 tests that it has to satisfy: business/turover/compliance.

My question is this: The company has deducted tax from subcontractors and is due to pay this on its next monthly cis return, but has not got the funds to pay as yet. It has also had tax deducted by the main contractor. When the monthly cis return is filed with no payment, it will fail the compliance test. Is it possible to offset the tax it has suffered against the tax it is due to pay, and how is this done? 



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22nd Mar 2012 15:29


The amount due is not sent with the monthly CIS return but is paid along with any PAYE & NI due for employees of the company. If tax is being deducted from the company's income at source by the main contractor this is offset against the total of PAYE & CIS tax due for each tax month. If this creates a negative figure you need to file a nil PAYE payslip on-line and carry forward the amount still available to offset into the following tax month. Any deductions from income in excess of the PAYE liability at the end of the tax year can be refunded to the company and this is done via the P35 year end reconciliation. Don't hold your breath for the tax refund though - it usually takes HMRC until October or later to send this back!

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