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HMRC internal manual

Employment Status Manual

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HM Revenue & Customs
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Particular issues - Extra Statutory Concession C32 - interest relief for companies with Construction Industry Scheme (CIS) deductions - general

A new Extra Statutory Concession (ESC C32) has been introduced that affects companies that fall within the IR35 legislation and which suffer CIS deductions. Where deductions under the CIS provisions exceed the corporation tax payable, a repayment of CIS tax may be set off against the tax and NIC liability on the deemed payment.

Under ESC C32, companies can request a set-off of any overpayment of CIS tax against the tax and NICs in respect of a relevant deemed payment provided they have submitted the correct return by 31 January.

Where an intermediary is subject to the IR35 legislation in respect of income which it has received under deduction under the CIS then, if the intermediary:

  • is a company, and
  • is treated as making a deemed Employment Income payment in any tax year, and
  • in respect of an accounting period which overlaps with a tax year for which a deemed payment is treated as made, is entitled to a repayment of corporation tax as a result of deductions being made under the CIS, thenit may make a claim to set off the CIS repayment due to it against any outstanding tax and NICs due on the deemed Employment Income payment, using 19 April as the effective date of payment for the set off.

The concession applies in relation to deemed payments treated as paid on 5 April 2001 and will be reviewed for later years.

For guidance on how to deal with claims under ESC C32 see ESM3270and TS58/01.

The full text of ESC C32 is reproduced at ESM3271.