ESM3271 - Particular issues - Extra Statutory Concession C32 – interest relief for companies with Construction Industry Scheme (CIS) deductions – text of ESC C32
ESC C32 - Interest relief : companies with tax and National Insurance(NICs) liabilities under the personal service rules where the payments forrelevant contracts have been received after deduction of tax by virtue ofthe Construction Industry Scheme (CIS) provisions
Under the service provision rules, intermediaries such as
personal service companies are required to account for tax and NICs
by 19 April on deemed Employment Income payments arising at 5 April
in respect of relevant engagements. If an intermediary is unable to
finalise the calculation of its deemed Employment Income payment by
19 April then interest will be charged on any late paid tax and
NICs.
The deemed Employment Income payment calculation is based
upon the amount the company receives for the relevant
engagement(s). It is independent of any calculations made for the
purposes of the CIS and does not take into account any deductions
of tax from payments received. The CIS deduction is treated as
Corporation Tax paid in respect of the profits of the company. It
is not therefore available for offset against any liability in
respect of the deemed Employment Income payment and secondary NICs.
Where an intermediary is subject to the service provision
rules 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, then
it may make a claim to set off the CIS repayment due to it
against any outstanding tax and NICs due on the deemed Schedule E
payment, using 19 April as the effective date of payment for the
set off.
Where such a claim is made by 31 January following the 19
April when payment is strictly due and that claim is accepted, then
interest will not be charged on the amount of late paid tax and
NICs which is matched by the Corporation Tax repayment up to the
date of the repayment of the Corporation Tax.
The concession will apply in relation to Employment Income
payments deemed to arise at 5 April 2001 on which the tax and NICs
is due by 19 April 2001. It will be reviewed for later tax
years.
