Will I have to pay tax twice (CIS25)?

[europa16]

Hi all,

I'm hoping somebody can help me with this possible problem.

My partner is self employed, under the CIS scheme, and gets his tax deducted by the contractor he works for. Recently this company has been getting into some serious financial difficulties, and as a result, cannot even pay him what he's owed.
I'm having doubts as to whether they have paid his taxes to the Inland Revenue this tax year (2005/06). He has only received one CIS25 voucher, and that was from Aug 2005! Trying to get his vouchers is like getting blood out of a stone :-(

If this company goes bust, without having paid my partner's taxes (despite them being deducted) can the Inland Revenue come after him for them, or will they chase the company?

And what would the chance of him getting his tax return (if paid, he's entitled to a little over a grand at the moment)?

Any advice is appreciated.

Thanks

DMH

[deanshepherd]

This can be a problem with some contractors.

You just have to put the facts as they are on your partners tax return. The Revenue will attempt to recover the tax deducted from the company and its directors and not your partner.

I have had clients in the past who did not receive their CIS vouchers. We still put the details as they should have been on the tax return and the client received his refund with no questions asked.


Dean Shepherd
dean.shepherd@mmi-online.co.uk
MMI Accountancy
www.mmi-online.co.uk

[jpcentral]

I've just checked this for one of my clients this morning. The Notes on Self Employment say, "If you cannot get a CIS25, please give the following details in the Additional Information Box 3.116 on page SE4:

name and address of the contractor

month payment(s) were made to you

amount of the gross payment

amount of tax taken off"

John Perry
Central Business Services
Loughborough
www.centralbusiness.co.uk

[europa16]

Thank you for your comments. They have finally put my mind at rest :-)

Fingers crossed they don't go bust, but at least I have an idea of what to expect now.

Thanks again,

DMH

[CDavey9501@aol.com]

This is a little tricky. If the contractor issues the vouchers then they have certified that the tax has been deducted from your hubby. Regardless of whether they pay over the tax your husband would almost certainly obtain credit. The legislation does say the tax should be paid over as well but under agency law the Revenue cannot really hold your husband responsible for the actions of one of its 'collection agents' (i.e. the contractor).

The position is much weaker if no certificates have been issued. As a subcontractor, your husband is after all responsibile for obtaining the vouchers from the contractor every month. Strictly, if your husband is not receiving the vouchers he should bring this to the attention of the Revenue at the earliest opportunity. Waiting until after the end of the tax year and putting the information on the tax return is probably relying on a little luck - i.e. he may get the credit simply because of 'process now check later' regime of SA.

In any case as much documentary evidence that tax has been deducted should be maintained - payment slips, bank statements etc. It will probably be a little easier to convince the tax office if all payments are divisible by 82% - if your hubby is simply receiving round sum payments with no payslips then he will have a much more difficult time if the issue ever arises.

[europa16]

My husband does have all the bank statements for this tax year, so that isn't a problem. Also I do invoices for all work done, and as these are faxed over to the contractor each week, I do have the originals (I had to send all the invoices into the IR for 04/05).

I will get onto the IR CIS department ASAP and bring it to their attention, like you suggested, and let them know the current state of play with the vouchers. Hopefully they will be able to help.

Thanks


DMH