The Income Tax (Sub-contractors in the Construction Industry and Employments) (Amendment) Regulations 2003

Amendment of the Sub-contractors Regulations

8.  After regulation 44A (electronic transmission)(1) insert—

“Application by the Board of sums deducted under section 559

44B.— (1) In the case of sums deducted from payments made to a sub-contractor which is a company (“the qualifying sub-contractor”) the following provisions of this regulation apply.

(2) So much of any sum deducted under section 559 by a contractor in a year of assessment and paid to the collector as is required shall be applied by the Board—

(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 his 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 his 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 under section 203 of the Taxes Act (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(2), section 73B(3) of the Education Scotland) Act 1980(3), or Article 3(5) of the Education (Student Support) (Northern Ireland) Order 1998(4);

(e) fifth, in discharge of any liability of the qualifying sub-contractor to refund to the Board any funding payment made by them in respect of statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay under the relevant recovery provision;

(f) sixth, in respect of any liability of the qualifying sub-contractor to account for sums recoverable by the Board in respect of tax credits under regulation 12 of the Tax Credits (Payment by Employers) Regulations 2002(5); and

(g) 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 559 from payments made to other sub-contractors.

(3) So much of any sum deducted under section 559 as is not required to discharge the employer’s liabilities specified in paragraph (2) shall be repaid to the qualifying sub-contractor.

• This is subject to the qualifications in paragraphs (4) and (5).

(4) The Board shall not repay any sum deducted under section 559 to the qualifying sub-contractor until—

(a) the year of assessment, in which the deduction was made, has ended; and

(b) the qualifying sub-contractor has delivered the return required by regulation 43 of the Income Tax (Employments) Regulations 1993(6).

(5) If it appears to an officer of the Board 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 559, the amount required to discharge that liability shall be retained by the Board and applied in discharge of that liability.

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

(a) in respect of 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(7) or the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations (Northern Ireland) 2002(8);

(b) in respect of statutory maternity pay, regulations 5, 6, 6A and 7A of the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendment Regulations 1994(9) or the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendment Regulations (Northern Ireland) 1994(10).”.

(1)

Regulation 44A was inserted by regulation 35 of S.I. 1998/2622.

(2)

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).

(3)

1980 c. 44. Section 73B was inserted by section 29(2) of the Teaching and Higher Education Act 1998.

(4)

S.I. 1998/1760 (N.I. 14). Relevant instruments under this Order are S.R. 1999 Nos. 192 and 370.

(5)

S.I 2002/2172.

(6)

Regulation 43 has been amended by regulation 14 of S.I. 1998/2484 and regulation 15 of S.I. 2001/1081.

(7)

S.I. 2002/2820.

(8)

S.R. 2002 No. 379.

(9)

S.I. 1994/1882. The relevant amending instruments are S.I. 1195/566, 2002/225 and the Statutory Maternity Pay (Compensation of Employers) Amendment Regulations 2003.

(10)

S.R. 1994 No. 271.The relevant amending instruments are S.R. 1995 No. 74, S.I. 2002/225 and the Statutory Maternity Pay (Compensation of Employers) Amendment Regulations 2003.