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Markel Tax

15 Apr 2020

CIS deductions affecting cash-flow

Question: My client company is a construction sub-contractor and makes up accounts to 31 December each year. In the year up to 31 December 2019, the company had a small tax liability after setting off CIS deductions, but has made losses in excess of the 2019 profits in the first three months of the year, and the CIS deductions are affecting cash-flow. Can my client do anything to advance their tax refunds?

Answer: A limited company is free to shorten the period it draws accounts up for so could consider preparing accounts for, say, a six-month period to 30 June 2020. This would allow the accounts and corporation tax return for that six-month period to be filed at an earlier date than the accounts and corporation tax return for a full year to 31 December 2020 would be, perhaps as much as 15 months earlier to allow for filing before the tax for the year up to 31 December 2019 is due.

The limited company would then also be free to prepare a second six-month set of accounts made up to 31 December 2020 to restore the former year-end, or to continue with the 30 June year end for future years.

Tagged Employer solutions COVID-19