gross payment status

the_money_pit

Hi all. I posted a while back about the possibility of my husband losing his gross payment status through the construction industry scheme. Before anyone jumps on me and tells me we deserve it, it was lost for 2 late payments of self assessment tax, 1 late by 3 weeks the other 4 weeks, both as a result of late payments to us by contractors.
Anyway, it has happened and the problem we are now facing is a total inability to meet our financial commitments.
Let me explain;
This week my husbands cheque totalled - £6000
20% deducted at source- 1200

Nett cheque - 4800
Subbies gross - 4900

Now the real problem is that the inland revenue still expect us to pay the subbies tax monthly as well as them taking the initial 20% but this leaves us with two choices, either live on nothing or dont pay the subbies tax as in effect it has already been taken.

I know this sounds really confusing but this is how we are told it is to work. In short we are totally up s**t creek and losing our sanity fast.

Is anyone else in this situation or does anyone have any experience of it????

Elaine_Wilson

You have my sympathy. I hate to say this but on a strict interpretation of the law they are correct.

I have come across a similar situation recently. In fact, my client was in a better position than your husband. He at least had about £50 left for himself each month!

His situation was better than yours though. I wouldn't want to get your hopes up. He had two defaults because one cheque arrived on the 1st February - one day late. This counted as two defaults because the cheque covered a balancing payment for one year and the interim payment for the next.

Anyway we appealed and although the appeal was rejected in the first instance I said that the client wished to have the matter heard before the Commissioners. (I was dreading this as my client's language can only be described as colourful. Perhaps it is best described as saying that the letter f is not underused.)

HMRC decided in the end to make an exception in this case. (I wonder why?)

In your case I can only suggest that you appeal the decision on the grounds that although the late payments fall outside the permitted limits they should still be considered trivial in view of the general economic climate.

The government's policy on Business Support Payments (look at the HMRC website for details of this) is to help small businesses through this crisis. Although it doesn't apply in your case the general thrust of the argument would be that HMRC should take a more lenient view where the failure to comply is caused by the economic crisis rather than lax administration on the part of the taxpayer.

I wish you luck and hope that HMRC will see sense. But don't bet on it.

the_money_pit

Thanks Elaine for your reply. We have already had our case heard by the commisioners and we lost, surprise surprise!!
The real problem now is the total unworkability of the outcome, reality is we cant live on nothing, we are a family of 7 and bills still keep coming, regardless of our situation.
At the moment I am going to put in monthly returns with no payment as the money is in effect already gone in the 20% deduction but I know this is not the answer, trouble is I dont know what the answer is.

jayencee

Hi, we have a similar situation but are able to offset the 20% deduction made by our contractors against the money we have to pay over to IR for our subbies tax and only have to submit any payment due quarterly.

DCodd

Contact HMRC and explain the situation, they should as posted above allow you to offset the Deductions suffered against the deductions you have made from your subbies, thus leaving you (in the week quoted) £980.00.

the_money_pit

Thank you for your replies, so far the revenue have told us that tax can only be offset if we are a limited company which we are not. If we could do this our life would be transformed. At the moment we are at tearing our hair out stage!!

DCodd

Having spoken to HMRC on a number of occasions regarding this issue, they have told me that to offset your deductions suffered against deductions made you do not need to be a Limited Company.

Have you spoken to the CIS helpline? The people who answer queries on the helpline (with all due respect to them) do not have the training to be able to make this type of judgement and so you need to ask them to log a technical query and get a senior adviser to call you back.

Edit - you may offset against any PAYE you pay, if you do.