ESM8410 - Particular issues: Extra Statutory Concession C32 - interest relief for companies with Construction Industry Scheme (CIS) deductions - text of ESC C32

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 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.