Hi there, sorry another query about CIS, this time payment to HMRC, I know that CIS payments deduced from suppliers needs to be paid to HMRC and PAYE NI. Query - the tax suffered by my client due to CIS I have been advised by the bookkeeper I have just taken over from (who has made a mess of the accounts) should be taken off from the payment to HMRC, so for example total CIS and PAYE = £1000, CIS tax sufferered £300 payment made to HMRC = £700, is this correct or should the £300 sit in the balance sheet to be offset against corportation tax etc. Also on quickbooks would you set up a separte account for PAYE/NI and separate CIS deduced and CIS sufferered and what section would you set these up in. Any advice appreciated. Julie
As far as I know the CIS can be offset against what the company owes to HMRC as regards to Tax and NI - not sure it can be offset against Corporation tax.
Companies can offset any CIS tax deducted by their customers against PAYE/NI/CIS that they have to pay. This option is not available for sole traders and partnerships.
When they do the P35, if there is a balance owed back to the company, it must be reclaimed - even if the same money will then be used to pay the corporation tax.
Exactly as gbm says above. This function called CIS132 can only be applied to Ltd companies (sole traders, partnerships etc are excluded). Generally, the amount the company suffers versus the amount they deduct will be higher and so will be shown as an overpayment on their P35. There used to be a facility where you could offset this against CT but the Revenue do not share information between departments that would, in essence, make life easier. Therefore, it is far simpler to reclaim the overpayment from PAYE and then use this to pay CT.
