Regulation 56 Application by the Commissioners for Her Majesty’s Revenue and Customs of sums deducted under section 61I1

United Kingdom

Changes not yet applied. Later legislation changes this provision in ways not yet written into the text below:

reg. 56(5A)-56(5B) and preceding words inserted by Income Tax (Construction Industry Scheme) 2015 reg. 2(3)
reg. 56(2)(e) words substituted by Statutory Shared Parental Pay 2015 reg. 4(3)(a)
reg. 56(2)(e) words inserted by Statutory Shared Parental Pay 2015 reg. 4(3)(b)
reg. 56(7)(a) word omitted by Statutory Shared Parental Pay 2015 reg. 4(4)(a)
reg. 56(7)(aa) omitted by Statutory Shared Parental Pay 2015 reg. 4(4)(b)
reg. 56(7)(c) inserted by Statutory Shared Parental Pay 2015 reg. 4(4)(c)
reg. 56(7)(d) word inserted by Income Tax (Construction Industry Scheme) 2022 reg. 2(2)(a)
reg. 56(7)(d) words inserted by Income Tax (Construction Industry Scheme) 2022 reg. 2(2)(b)
reg. 56(8)(a)(iii)(iv) word omitted by Income Tax (Construction Industry Scheme) 2021 reg. 9(a)
reg. 56(8)(a)(v)(vi) inserted by Income Tax (Construction Industry Scheme) 2021 reg. 9(b)
reg. 56(7)(d) and semi-colon inserted by Statutory Parental Bereavement Pay 2020 reg. 4(4)(a)
reg. 56(2)(e) words substituted by Statutory Parental Bereavement Pay 2020 reg. 4(3)
reg. 56(2)(e) words substituted by Statutory Neonatal Care Pay 2025 reg. 4(3)
reg. 56(7)(e) inserted by Statutory Neonatal Care Pay 2025 reg. 4(4)

(1)

This regulation applies to sums deducted from contract payments made to a sub-contractor which is a company (“the qualifying sub-contractor”).

(2)

So much of any sum deducted under section 61 of the Act by a contractor in a tax year and paid to the Commissioners for Her Majesty’s Revenue and Customs as is required shall be applied—

(a)

first, in discharge of any liability of the qualifying sub-contractor to account for primary Class 1 contributions in respect of earnings paid to its employees in that year;

(b)

second, in discharge of any liability of the qualifying sub-contractor for secondary Class 1 contributions in respect of earnings paid to its employees in that year;

(c)

third, in discharge of any liability of the qualifying sub-contractor to account for tax deducted from the emoluments of its employees in accordance with Regulations made under section 684 of ITEPA (pay as you earn) in respect of that year;

(d)

fourth, in discharge of any liability of the qualifying sub-contractor to account for deductions made by it in that year from the emoluments of its employees in accordance with regulations made under section 22(5) of the Teaching and Higher Education Act 1998^f1, section 73B of the Education (Scotland) Act 1980^f2, or Article 3(5) of the Education (Student Support) (Northern Ireland) Order 1998^f3;

(e)

fifth, in discharge of any liability of the qualifying sub-contractor to refund to the Commissioners for Her Majesty’s Revenue and Customs any funding payment made by them in respect of statutory sick pay, statutory maternity pay, F1ordinary statutory paternity pay, additional statutory paternity pay or statutory adoption pay under the relevant recovery provision; and

(f)

last, in discharge of any liability of the qualifying sub-contractor to account for sums deducted by it (in its capacity as a contractor) under section 61 of the Act from payments made to other sub-contractors.

F2(2A)

For any tax period where as a consequence of paragraph (2) the qualifying sub-contractor pays an amount to the Commissioners for Her Majesty’s Revenue and Customs in respect of any liability referred to in that paragraph that is less than the amount the qualifying sub-contractor would have paid but for that paragraph, paragraph (2B) applies if the qualifying sub-contractor is a Real Time Information employer for the purposes of the PAYE Regulations.

(2B)

The qualifying sub-contractor must deliver to the Commissioners for Her Majesty’s Revenue and Customs a return under this paragraph stating the value of the sums deducted from contract payments made to the qualifying sub-contractor under section 61 of the Act in the tax year to date.

(2C)

The return required by paragraph (2B) must be delivered within 14 days after the end of the tax period.

(2D)

If an employer makes an error in a return under paragraph (2B), the employer must provide the correct information in the first return made under that paragraph after the discovery of the error.

(2E)

But if the information given has not been corrected before 20th April following the end of the year in question, the employer must provide the correct information for the year in question in a return under this paragraph.

(3)

So much of any sum deducted under section 61 of the Act as is not required to discharge the sub-contractor’s liabilities specified in paragraph (2) shall be repaid to the qualifying sub-contractor.

This is subject to the qualifications in paragraphs (5) and (6).

F3(4)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)

The Commissioners for Her Majesty’s Revenue and Customs shall not repay any sum deducted under section 61 of the Act to the qualifying sub-contractor F4unless—

(a)

the tax year in which the deduction was made, has ended; and

F5(b)

the qualifying sub-contractor has paid to the Commissioners for Her Majesty’s Revenue and Customs—

(i)

any amounts the qualifying sub-contractor deducted from contract payments in their capacity as a contractor during that tax year, and

(ii)

any amounts due under the PAYE Regulations in respect of that tax year.

(6)

If it appears to an officer of Revenue and Customs that there is an outstanding liability of the qualifying sub-contractor in respect of corporation tax due for an accounting period ending before the relevant payment is made under section 61 of the Act, the amount required to discharge that liability shall be retained by the Commissioners for Her Majesty’s Revenue and Customs and applied in discharge of that liability.

(7)

In paragraph (2)(e), “the relevant recovery provision” means—

(a)

in respect of F6ordinary statutory paternity pay and statutory adoption pay, regulations 4, 5, 6 and 8 of either the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002^f4 or the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations (Northern Ireland) 2002^f5;

F7(aa)

in respect of additional statutory paternity pay, regulations 4, 5, 6 and 8 of either the Additional Statutory Paternity Pay (Birth, Adoption and Adoptions from Overseas) (Administration) Regulations 2010 or the Additional Statutory Paternity Pay (Birth, Adoption and Adoptions from Overseas) (Administration) Regulations (Northern Ireland) 2010;

(b)

in respect of statutory maternity pay, regulations 5, 6, 6A and 7A of the Statutory Maternity (Compensation of Employers) and Miscellaneous Amendment Regulations 1994^f6 or the Statutory Maternity (Compensation of Employers) and Miscellaneous Amendment Regulations (Northern Ireland) 1994^f7.

F8(8)

A return under this regulation must—

(a)

state—

(i)

the employer’s HMRC office number,

(ii)

the employer’s PAYE reference for the purposes of the PAYE Regulations,

(iii)

the employer’s accounts office reference, and

(iv)

the tax year to which the return relates, and

(b)

be delivered using an approved method of electronic communications unless the qualifying sub-contractor is one to whom regulation 67D of the PAYE Regulations applies, in which case the return must be made in a document or format provided or approved by the Commissioners for Her Majesty’s Revenue and Customs.

Annotations

Textual amendments

F1: Words in reg. 56(2)(e) substituted (14.11.2010) by The Income Tax (Construction Industry Scheme) (Amendment No. 2) Regulations 2010 (S.I. 2010/2495), regs. 1, 4(a)
F2: Reg. 56(2A)-(2E) inserted (6.4.2012) by The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2012 (S.I. 2012/820), regs. 1, 7(a)
F3: Reg. 56(4) omitted (with effect in accordance with art. 1(2) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments), Appointed Days and Consequential Provisions Order 2014 (S.I. 2014/992), arts. 1(1), 11(c)
F4: Word in reg. 56(5) substituted (6.4.2012) by The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2012 (S.I. 2012/820), regs. 1, 7(b)
F5: Reg. 56(5)(b) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2013 (S.I. 2013/620), regs. 1(2), 4
F6: Words in reg. 56(7)(a) substituted (14.11.2010) by The Income Tax (Construction Industry Scheme) (Amendment No. 2) Regulations 2010 (S.I. 2010/2495), regs. 1, 4(b)
F7: Reg. 56(7)(aa) inserted (14.11.2010) by The Income Tax (Construction Industry Scheme) (Amendment No. 2) Regulations 2010 (S.I. 2010/2495), regs. 1, 4(c)
F8: Reg. 56(8) inserted (6.4.2012) by The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2012 (S.I. 2012/820), regs. 1, 7(d)

Commencement

I1: Reg. 56 in force at 6.4.2007 as notified in the London Gazette (dated 9.3.2007), see reg. 1

Footnotes

f1: 1998 c. 30. Regulations made under section 22(5) of the Teaching and Higher Education Act 1998 and section 73B(3) of the Education (Scotland) Act 1980 are the Education (Student Loans) (Repayment) Regulations 2000 (S.I. 2000/944).
f2: 1980 c. 44. Section 73B was inserted by section 29(2) of the Teaching and Higher Education Act 1998.
f3: S.I. 1998/1760 (N.I. 14). Relevant instruments under this Order are S.R. 1999 Nos. 192 and 370.
f4: S.I. 2002/2820.
f5: S.R. 2002 No. 379.
f6: S.I. 1994/1882. The relevant amending instruments are S.I. 1195/566, 2002/225 and 2004/698.
f7: S.R. 1994 No. 271. The relevant amending instruments are S.R. 1995 No. 74, S.I. 2002/225 and 2004/698.