UK Tax Questions? Ask a UK Tax Advisor for answers ASAP
Thanks for your question
It probably will not surprise you to hear that the answer is no, the gross certificate is allocated to the work you undertake under a specific status, so current CIS certificate is for work as a sole trader only, ands you must wait for the outcome of the limited company application to see if gross status can be awarded there too. In the meantime you will have to suffer 20% tax deductions.
However, as a limited company you can offset the tax suffered against tax you have deducted and would usually pay over to HMRC (known as a set off)
Thank you ,is there any requirements that the Company will have to fullfill in order for the gross status to be awarded.
Yes there are three tests
These require the following
You'll need to show HMRC that your business:
HMRC will look at your business turnover from construction work for the 12 months before you apply for gross payment status. Ignoring VAT and the cost of materials, your construction turnover must be at least:
Will he be able to deduct any tax deducted at source from any Corporation Tax liability?
No - I am afraid only offsets from CIS tax suffered. (Not corporation tax or own self assessment tax)
How will he then re-claim any excess CIS deducted at source?
Yes that is included in his CT return - but this is detailed with the calculation due for the period.
I thought you were asking whether it could be used against outstanding CT due. (so an immediate set off)
I do apologise
Sorry ,there appears to be some confusion about my question.Assume that the Company has excess tax deducted at source than that deducted from it`s subcontractors!If he can`t offset this against the Companies CT liability ,how then will the Company physically receive these excess tax deducted at source?
As a limited company you would show the income earned through your CT return and then for the CIS suffered on that income either
1) can be set off against CIS collected and PAYE deductions made (so this reduces the payment paid over to HMRC each 19th of the month (and you would file a CIS return and a FPS under real time information AND show the CIS suffered so that HMRC knew what to expect from you as payment ) OR
2) Reclaim all or any excess at the year end
See link here and see under heading Reclaim CIS deductions taken from payments