HMRC CIS refund issue persists
The late repayment of Construction Industry Scheme (CIS) refunds relating to limited company clients by HMRC remains an issue for accountants, according to the ICPA’s Tony Margaritelli and other AccountingWEB members.
Margaritelli warned that refunds still aren’t being repaid as rapidly as they should be, despite assurances from working together groups that the issue wouldn’t arise in 2013.
“When I asked HMRC, their response was they were surprised it was happening. Last year, people were still receiving refunds in January, which is an absolute disgrace,” the ICPA chairman said.
"Apparently, it's the dreaded computer systems," Margaritelli added. "This time next year they'll be looking at real time initiatives and they'll say it shouldn't happen in 2014, but my answer would be let's wait and see. They did tell us at working together initiatives that we wouldn't have that issue this year."
When asked by AccountingWEB, the Revenue said that the delay in refunds was in part due to it being the “peak period” for receiving repayment claims following the end-of-year P35 deadline and neither confirmed nor denied it had anything to do with IT systems.
“We understand the impact of any delay in making repayments to customers. We are working hard to reduce our turnaround times,” a spokesperson said.
They added that all repayment claims up to and including 19 July had been cleared, except in cases where they needed to write to the employer for further information to progress.
The Revenue said it had deployed additional resources to process these cases and are scheduled to clear them by the end of October.
“When HMRC receives a request for a CIS repayment, we must carry out checks to verify the repayment claimed against the complete figures shown on the sub-contractors’ records.
“Where we can verify only part of a claim, we will always make a provisional repayment while we confirm the final amount due,” the spokesperson concluded.
As well as ICPA members who got in touch with the chairman, AccountingWEB members also raised the issue on Any Answers, where sparky999 started the debate that saw others in the same position come forward.
“I can honestly say that this matter is driving me out of the profession,” they wrote.
Sparky’s client is a subcontractor, with 20% CIS deductions and a VAT liability of £200,000. Their P35 for May 2012/13 shows a refund of £150,000 due to CIS deductions.
In the meantime, the company has £30,000 of VAT surcharges due to non-payment of VAT each quarter but can’t pay because of CIS.
Now, the debt management team have proceeded to the High Court for £200,000 worth of VAT owed by the company. HMRC’s PAYE team is taking four months to process the P35 and no time to pay arrangement can be talked of until the PAYE/CIS refund is reallocated.
Further to this, sparky filed the CIS deduction information using EPS via RTI and HMRC issued a statement of liabilities for the PAYE and NIC due for three months with no account for the CIS deductions suffered.
“I spoke to HMRC today and they need to check their system to see why it hasn’t allocated the CIS deductions info filed on EPS reports via RTI. They can see the details but they haven't been allocated.
“HMRC also noted that for 2013-14, any refund of PAYE/CIS due will not be issued or reallocated until after the end of the tax year. So my client faces the same predicament,” sparky said.
While the client’s predicament may be relatively unique, many other AccountingWEB members came forward in support for the accountant and to share their own tales.
One member who shared their sympathy, bigmuggsy, even posted a similar thread on Any Answers in 2012, detailing their frustration with the issue.
In April last year, HMRC issued a document which said as per working together group meetings: “We have established a more consistent and robust system for dealing with claims for repayment from limited company subcontractors working within the construction industry.”
But despite this, the problem persists into 2013.
Some members suggested, as ways of remedying the individual problem, speaking to a local MP about the issues, and others to take it to court or, like Kent Accountant, seek gross status.
“I have a client owed £175,000 in CIS from 2012/13. Fortunately the company now has gross status. I've been chasing repayment since May and have been told to expect repayment in October.
“I have been told the only way to possibly get a quicker repayment of the CIS debt is to submit a claim for financial hardship and send it to Longbenton,” he said.
This was backed up by Margaritelli, who said advice he had received from the agent resolution service was to write a letter with “extreme hardship” across the top to receive a quicker payment.
"It's ridiculous. If you need to get your money and that’s the only way you're going to get it, that’s apparently what you have to do," he concluded.
Have you had similar experiences with CIS refunds?