I have client who pays his subcontractors CIS. He had once two subcontractors with nearly the same names, only one letter. Previous bookkeeper submitted payment to the wrong person at the beginning last financial year.
Any advice what to do with it?
Thank you,
Alia
-- Edited by Alia on Tuesday 23rd of June 2015 12:06:47 PM
Hi
I would treat it same as if you paid any other supplier incorrectly. Pay any extra to anyone with a shortfall - send remittance or email or something to confirm what its for so they can match the previous payments with this to the paperwork. For anyone youve paid too much - either adjust the next payment you make ( and confirm in writing as above) or if you dont deal with them any more and depending on the amount contact them and ask for a refund or write it off.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Not sure if Im being a bit thick but - you have one underpayment and one overpayment to unravel? Were the reports to HMRC correct? When you say it was a year ago - Im assuming you mean the year end has been completed which is causing you the issue? So was it Limited or sole trader, as that will depend on what action you can take.
Worth writing down the full scenario in terms of who invoiced what/what they shouldve had reported and deducted and what shouldve been paid - then what was reported and paid. Makes the resolution easier.
if the year end has been finalised - if its a sole trader and their tax return has been done - then you could possibly do an amendment (unsure on this as I dont deal with sole traders - check via HMRC site - you may need to pay a fine). If it a Limited then Im assuming its not a material figure to the business so just enter it as 'prior year adj' - speak to the Accountant and tell them what you are doing.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
yes, it's last financial year, I am closing books for sole trader.
Scenarion
Mr X was paid 1440 to his bank account whereas Mr y (who wasn't working that time) was submitted to HMRC with 1800 and CIS was paid on him for 360, so, as you said, there is under payment and overpayment, although the full amount due to HMRC agrees.
What I am going to do is to write correction statements to the subcontractors and call HMRC. Do you think there will be penalty? It's really honest mistake.
I think no-one has closed their accounts yet, though, but year has ended...
All mentioned are sole trades
Hi Alia
So from the year end point of view, as you havent submitted a self assessment, you can still build it in to your year end just as you would if you received an invoice now that was dated prior to the year end. Its just the physical bank payments that will be post year end.
So then the only corrections you will need to sort are in terms of the CIS reporting. The figure you paid HMRC is correct BUT each of X and Y have got incorrect tax payments noted on their files with HMRC (and HMRC will have mis-allocated the payment) - ring the CIS helpdesk as this is the only way, as far as im aware, that you can adjust the return. See enclosed pages 33-25ish. See 4.42 - 4.45 re the fines situation - they might waive any possible fines given your scenario, assuming everything else is reported correctly and all payments are up to date, but only HMRC can give that assurance, or not.
