Tax adviser Nick Casson with more topical subjects

Nick Casson
Nick Casson
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HERE are some topical subjects where advice and guidance have been given recently:

CIS Tax Refund

for Limited Company.

Q: I own a small company in construction and some customers have been deducting CIS tax from our payments. How do I go about reclaiming this?

A: If you have employees from which you have deducted PAYE and National Insurance (NICs), you may offset the CIS deducted by customers from the amount you are due to pay to HM Revenue & Customs (HMRC) each month quarter. HMRC offer Form CIS132 to keep a record of how much CIS deductions have been offset.

If your CIS deductions exceed the amount of PAYE and NICs due, you cannot claim a refund. You must instead carry forward the surplus to the next payment due to HMRC.

You will need to enter the total CIS deductions taken on the P35 Employer Annual Return too, which is due at the end of the tax year by the following May 19. HMRC will repay any balance of deductions your company was not able to offset during the year. Only companies can use the P35 to recover CIS deductions taken from payments; not individual subcontractors or partnerships.

If you don’t feel confident dealing with, feel free to get in touch with your local TaxAssist accountant who would be happy to help you with this.

Property losses -

do I need a tax return?

Q: I have a buy-to-let property, but because of the size of the mortgage, do not make any profit from it. I am employed and have never submitted a tax return before - do I need to now?

A: Although you have no income to tax from your property, you would probably benefit from informing HMRC of the losses by submitting a tax return. This will allow you to then carry forward the losses and offset them against future profits made from the property. It could save you tax in the long-term. You are obliged to submit a tax return if your gross rents (ie income from the property before deducting any expenses) is over £10,000 per annum. This is irrespective of whether the property is profitable or not. If you would like assistance in registering with HMRC and completing your tax return, get in touch with your local TaxAssist accountant.


Tax refund

Q: I was put on an emergency tax code because my old employer has been slow to provide me with my P45. How do I go about getting the correct tax code and get my tax refunded?

A: Obtain your P45 from your old employer as soon as possible. Your new employer can then complete their sections and send the appropriate part to HMRC. Once they process the form, they issue you with a new tax code. Unless the tax year in which there is an issue has finished or you’re unemployed again, it’s unlikely you need to physically request a refund. Using your new code, your new employer should correct tax deductions and also refund any overpaid tax. You should see an increase in your net pay when your new tax code comes through.

Can I ignore the year end

Payroll P35 form I’ve received?

Q: I have received a P35 from HMRC but I don’t think I need to submit one. Can I just ignore it?

A: If you think you’ve received the form in error, you should inform HM Revenue & Customs (HMRC). Otherwise, the department will automatically raise late filing penalties. To notify HMRC that you do not need to submit the P35, you’ll need your Employer PAYE reference (you’ll find this P35 they’ve sent you) and your contact details. You will also need to know whether you are intending to submit form P11D(b) as well. You can notify them at, over the phone with the Employer Helpline on 08457 143 143 or via an agent (such as an accountant).

How should I pay my wife?

Q: I have my own business and now my children are grown up, my wife would like to return to work and deal with some administrative jobs for me. What is the most tax efficient way for her to be paid? Should I treat her as if she is self-employed and she invoices me?

A: Self-employed status generally results in a lower tax liability than that of employment. Firstly, the rate of National Insurance self-employed people generally pay is 9% (as opposed to 12% if employed). And secondly, the ‘employer’ does not need to pay Employer’s National Insurance on their behalf either. Of these two options, people therefore tend to prefer being treated as self-employed. You also have the option of transferring the business into a partnership and giving your wife a share of the profits. However, you cannot simply choose to treat your wife as self-employed/ partner/ employed- it is really a question of the facts and HMRC has guidance in this area. We recommend you seek professional advice before proceeding, firstly, to check you are within guidelines and legislation and secondly, to calculate the tax position.

Am I employed

or self-employed?

Q: I am a contractor and I have just picked up a big contract with a large firm. However, I am a bit confused as to whether I am employed or self-employed. Can you clarify it for me please?

A: To establish your employment status, your employer may find it helpful to use the Employment Status Indicator (ESI), HMRC’s online interactive tool that asks a series of questions about the working relationship between the two parties. It is the quickest way of getting HMRC’s view on whether a worker is employed or self-employed. The ESI tool can be accessed on their website here: HMRC will accept the tool’s outcome as binding; as long as your employer has answered accurately to reflect the terms and conditions under which you provide services. Your employer must also retain a printout:

DISCLAIMER: Advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel the information provided is beneficial it is important you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss.