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HMRC internal manual

Construction Industry Scheme Reform Manual

From
HM Revenue & Customs
Updated
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The Scheme: secondary legislation: regulation 56

 

This regulation deals with the set-off arrangements for companies operating on net payment status: to be read in conjunction with FA04/S61 and 62(3).

This regulation only applies to subcontractors with net payment status which are companies. Deductions held by HMRC in respect of companies with net payment status should be set-off in the following sequence: SI2005/2045 reg 56(2).

  1. to discharge any liability the subcontractor company has to primary Class 1 contributions in respect of earnings paid to employees during the year;
  2. to discharge any liability the subcontractor company has to secondary Class 1 contributions in respect of earnings paid to employees during the year;
  3. to discharge any liability the subcontractor company has to account for tax deducted from the emoluments of their employees under S684 ITEPA for the year;
  4. to discharge any liability the subcontractor company has to account for deductions made in that year from emoluments of their employees under S22(5), Teaching & Higher Education Act 1998, S73 (B) of the Education (Scotland) Act 1980; or Article 3(5) of the Education (Student Support)(Northern Ireland) Order 1998;
  5. to discharge any liability the subcontractor company has to refund HMRC in respect of payments made by them in respect of statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay under the relevant recovery provision; and
  6. to discharge any liability the subcontractor company has to account for CIS deductions made by them from payments to subcontractors under FA04/S61.

If, after all the above liabilities have been discharged, sums remain outstanding,these can be reimbursed to the subcontractor company, subject to (5) and (6),: SI2005/2045reg 56(3).

Any monies repaid to the subcontractor company will be regarded as tax repaid for the purposes of Regulation 83 of the PAYE regulations (repayment supplement): SI2005/2045 reg56(4).

Repayments in accordance with (4) cannot be made until the end of the tax year in which the deduction was made and the subcontractor company has delivered a return under Regulation 73 of the PAYE regulations: SI2005/2045 reg 56(5).

If HMRC believes monies are due in respect of corporation tax for an accounting period ending before the relevant payment was made, they may retain an amount required to discharge this liability before any repayment can be considered: SI2005/2045 reg 56(6).

the relevant recovery provision’ is defined at SI2005/2045 reg 56(7).

ENABLING PROVISION – FA04/S62 (3)