Struggling with a Limited Company CIS reclaim

Need help with sorting out a Limited Company CIS reclaim with Corporation Tax offset

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Have taken on a new Ltd Co client recently from another accountant. The company is a CIS subcontractor.

He is trying to get a refund of CIS deducted during the year 2016/17 (company year end is 31st March which helps).

He has filled in the online form to make the claim. He has 4,200 CIS to reclaim and 2,000 CT to pay. So net refund due of 2,200. No other PAYE or CIS to confuse the situation.

HMRC have replied and said they need a 16/17 EPS with the YTD CIS deducted on it. Who would that EPS be from .. my client (the subcontractor) or the contractor who was paying his company? If its the contractor's EPS not sure what to do

Haven't handled this situation before so not quite sure HMRC are wanting. Surely if the net refund due is 2,200 and my client has the CIS certificates to back it up then isn't that enough?

Self employed CIS reclaims seem so much easier

Could someone help?

 

Replies (14)

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Euan's picture
By Euan MacLennan
08th Apr 2018 12:23

For company CIS, the essential prerequisite is an EPS from the company to report the CIS tax suffered.

Does the company have a PAYE scheme? I would have thought so in order for the contractor to be able to verify the company as a 20% (presumably) sub-contractor. If not, apply for a PAYE scheme online immediately -it takes about 2 weeks for the PAYE references to come in the post.

Then, you will need either payroll software or HMRC Basic PAYE Tools to submit a final EPS for 2016/17 to report the total CIS tax suffered in the tax year.

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By Shahood
08th Apr 2018 14:40

In simple words, your clients needs to send EPS. If they have PAYE scheme setup or if they are running payroll then just report all the CIS deductions through payroll and send EPS.

Once received by HMRC you will have a credit balance on PAYE which can offset against Corp tax. You will have to write them to offset it.

Hope that answers your queries

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By arthurallan
08th Apr 2018 21:02

Very helpful .. thanks

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By Ian McTernan CTA
09th Apr 2018 12:12

In a real useful system it would all join up- so when the client suffers the tax it is credited against their overall tax position (oh look, Ireland's system).

Sadly, we have a mess of a system. So you HAVE to submit a EPS from the company showing the tax already reported to HMRC as deducted by the company that deducted it in order for HMRC to credit it, then you have to claim it!

It's farcical, and I'm going round in circles with a client trying to get money back from HMRC that my client suffered two years ago....

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By Homeworker
11th Apr 2018 10:21

We have a slightly more difficult problem, as although we act for the company, we did not do the payroll and the bookkeeper who did it did not include all of the CIS deductions in the 2016/2017 payroll. This did not come to light until we prepared the accounts but the company has ceased trading and the payroll has been shut down. Does anyone know if there is a time limit for amending an earlier year payroll and whether we can get it reopened to deal with this?

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Replying to Homeworker:
Euan's picture
By Euan MacLennan
11th Apr 2018 18:10

When you say "the payroll has been shut down", do you mean that the PAYE scheme has been closed?

Even if it has, try submitting an EPS to report CIS tax suffered - there is no time limit on filing such an EPS - and you may find that HMRC accepts it because they have marked the PAYE scheme as dormant, rather than closing it completely. Just make sure to include the correct totals for the 2016/17 tax year (EPSs report YTD totals, not monthly increments), not only for the CIS tax but also for any other items (statutory pay recovery, etc.) included on EPSs earlier in the tax year.

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By John Murdock
11th Apr 2018 17:15

I have a client who did not report the CIS deducted through their payroll system. I took photocopies of the the CIS deduction certificates sent them to HMRC with a covering letter and the CIS deducted was offset against the CT liability.

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By [email protected]
11th Apr 2018 17:29

You cannot claim back CIS via CT600 as you do in SA100 .
HMRC says because it is tax deducted at source so should be claimed through PAYE system . Hence you have to file EPS . Make sure you have CIS deduction certificates available to back up your claim . Also if your company year end falls in different tax years then you have to file EPS for both tax years.
And I do not remember exactly but I think You can only put a claim after 30th of April following the tax year .
Hope this helped .

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By Agutter Accounts
12th Apr 2018 06:33

I have a client who is a limited company and CIS sub-contractor. Every month when I do his RTI PAYE through HMRC Tools, I use the menu labelled "Employer Payment Summary (EPS) and Recoverable Amounts". That leads to a sub-menu where you pick "Add recoverable amount" and you itemise the deductions suffered in that pay period and it goes with your Full Payment Summary which you then submit to HMRC online.

As the year goes on you can see a summary of your PAYE account which shows clearly both what you have incurred in PAYE costs and also the CIS deductions you have suffered. Hopefully your client's previous accountant has done all that. If not, it's a faff.

At the end of the tax year, you do a final submission which confirms to HMRC you've completed the year and a final PAYE balance - in this case a credit - appears on the account.

I rang HMRC the other day for this client to see when this credit amount - a canny sum - could be reclaimed. We have to wait until after April 19th, the deadline for year-end payments before a claim can be processed. Then you can either ring the helpline or do the online form to make the claim. This being HMRC I shall do both.

A problem will arise if your client's previous accountant didn't record the recoverable amounts as they were incurred in the tax year in which they were suffered. It will probably mean a lot of calls to and from the Helpline to resolve. But as long as the Contractor who employed your client has done his CIS returns as he is required to do, there's a cross-check and a verification that HMRC can do.

Of course, the ideal is to become an HMRC "trusty" - three years keeping your nose clean, basically. I have a client in that position who is allowed to claim his CIS invoices gross without all the faff of deductions and claiming back.

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By North East Accountant
12th Apr 2018 08:46

Simple system would be treating it the same as sole traders and claim relief and repayment on Tax Return.

HMRC - that is too simple, lets have a total shambles for companies.

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By Accaols
27th Jul 2019 11:28

Hi

So what i understand from the discussion is: Company should show both CIS deducted and suffered in monthly payroll and if any credits will be claimable after company year end not on monthly basis. Company needs to file online annual form to show how much net CIS is claimable after deducting it with corporation taxes.

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By rjkaccounts
24th Mar 2020 15:45

But what if the online form no longer works for me (as an agent) and sends me round in circles within the Revenue websites

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By vodkaqueen
28th Apr 2020 18:46

I've just come across the same problem as RJK accounts. Last year I was told that we were no longer able to reclaim overpaid CIS for Ltd companies via a telephone call, it had to be done via the online form. Fair enough, did that, no issues last year last year, but today HMRC systems are asking me to setup an agent services account for my client. Absolute crap.

Just editing to point out I managed to complete using my own ASA, why it was asking my client to set one up is beyond me. I can only assume its a bug in their system.

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Replying to vodkaqueen:
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By Danielle AB3
05th May 2020 15:08

I'm having this exact problem, repeatedly trying to request a refund for CIS suffered for my client and the form just keeps throwing me out when I put in my ASA credentials. When you used your ASA, did you keep having to try or did it let you through the first time? Hoping it's a glitch and the next time I try it'll magically work...I can dream!

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