Postby jpcentral » Tue Nov 17, 2015 12:58 pm
As a self employed person (individual), CIS deducted is part of the calculation and it seems most probable that you will be entitled to a refund.
For a Ltd company there is no automatic offset of CIS deducted against corporation tax. CIS is supposed to be resolved by deduction from PAYE tax and NI but if you are a director only company, it is probable that there will not be any PAYE tax or NI to offset the CIS against. You therefore end the PAYE year (5 April) with a credit on your PAYE (CIS) account and have to request HMRC to allocate this to the corporation tax account. Unfortunately this process can take quite some time, possibly up to 6, 7 or 8 months.
You might find yourself in a cashflow conundrum if your year end doesn't match. For example, your corporation tax year ends in November but your PAYE year ends in March (or 5 April). You will be able to request a refund of CIS deducted up to 31 March 2016 shortly afterwards, but that is only a part year. Your corporation tax for the year to November 2016 will be due by 31 August 2017, but you might not have received your CIS refund for the PAYE year to 31 March 2017 by that date. You will, therefore, be expected to pay corporation tax before receiving your CIS refund.
It is possible to persuade HMRC to not charge penalties and to show the PAYE payment as an earlier date but this usually involves contacting HMRC and being pestered by HMRC's debt collectors. It may be sensible to set your commencement of trading date to the end of December or even January.
You hopefully know that you will have to re register for CIS under the company UTR and advise anyone you are working for of the change. One of the commonest problems we get is someone operating through a Ltd company, but a contractor still using a sole trader UTR. Causes a lot of grief.