Disappearing CIS

In 2007/08 my client limited company A Ltd (which does not have gross payment status) received payments from B Ltd subject to a 20% construction industry scheme (CIS) deduction.

A Ltd’s form P35 for that year showed a large repayment and I asked HMRC to set this against the corporation tax liability and to repay the balance.

HMRC advised that there are two differences between their and my client’s records and that the matter ‘has been submitted to an inspector for advice’. Despite chasing and a formal complaint repayment has still not been made and HMRC have cited FA 2004 s 62.

I have discovered that B Ltd had never registered for a PAYE scheme or CIS and a cursory internet search showed that the  directors of B Ltd had a previous company which was compulsorily wound up under a...