HMRS want to ignore corporation tax paid ... can anyone help please?

tiredwithtwins

HMRS - meant to type HMRC!!

Hi,
Wonder if anyone can give me any advice regarding a tax problem I (or rather my partner) have please?
I've done a forum search and found lots about MSC/composite/umbrella companies but nothing pertaining to our particular problem
My partner was employed through an agency last year and was (niavely on his behalf) paid via a composite company/umbrella/MSC - have read up on these and am aware of what they are/were and why they have been stopped.
The thing is, we are now completing my partners tax return for last year (he went self employed mid year) and have just been into the tax office for help on completing the tax return; they advised us where to put the paye earnings and dividend payments, but told us to just ''put to one side and ignore'' the corporation tax he has paid.
It amounts to about £500, and because of being paid this way we estimate we will get lumped with a tax bill of around £1k+.
He doesnt have a company set up in his name, and as i said earlier, niavely entered into this arragnement (not fully understanding the implications). He doesnt work for this agency now and they said they couldnt help when we rang them - the msc said as he wasnt working for the agency any longer they couldnt help either.
The tax adviser we saw in person said ''well, she...'' (he put us through to a technical expert on the phone) ''...said put it to one side and ignore it so just go with that'' - how can we ignore tax he has paid and just get lumped with another bill?
Can anyone give me any advise/pointers on how we go about getting this corporation tax recognised, or what we should do about it?

Thanks for any replies, hope my post made sense

Regards,

Sue.

Pennywise

"He" personally didn't pay any corporation tax - the company did.

He should enter the actual amounts of wages and dividends he received from the MSC onto his personal tax return. The actual "earnings", i.e. his hourly rate charged is irrelevant.

I don't think you realise the legal concept of a limited company as being a different legal entity. The company bills the client, pays various expenses, including wages to the worker, and there is then a resultant company profit upon which corporation tax is paid, then out of what's left over, it pays dividends to the shareholder.

HMRC are quite correct in saying to ignore the corporation tax paid by the company.

tiredwithtwins

Pennywise wrote: »

"He" personally didn't pay any corporation tax - the company did.

He should enter the actual amounts of wages and dividends he received from the MSC onto his personal tax return. The actual "earnings", i.e. his hourly rate charged is irrelevant.

I don't think you realise the legal concept of a limited company as being a different legal entity. The company bills the client, pays various expenses, including wages to the worker, and there is then a resultant company profit upon which corporation tax is paid, then out of what's left over, it pays dividends to the shareholder.

HMRC are quite correct in saying to ignore the corporation tax paid by the company.

Ah, thank you for explaining that - HMRC didnt explain that it was the composite company who had paid the corporation tax.
Thanks for taking the time reply,

Sue