www.iva.co.uk

Hi. Me and my partner have entered IVA last December. My partner for last year worked as subcontractor and he is due to tax return from HMRC later this year. Is it true that all tax return in full must go towards IVA? Why is it not 10/50/50 ?

If he wasn't paying this amount in tax deductions, the money would have been part of his regular income and then would have been used to increase his disposable income, therefore his IVA payment.

Thank You. Just wanted to make sure. This is what they said too.

Any repayments under the CIS scheme going forward will be your partner's and only pre IVA rebates are captured by the windfall clause. Make sure this is clear with the IP.

Hi Michael. Is this peculiar to the CIS scheme only, and enshrined in a Protocol somewhere ?

Hi Foggy. The Construction Industry Scheme]CIS is effectively a savings scheme whereby 20% of your income is deducted and paid to HMRC. When the tax return is then submitted there will either be tax to pay or too much was deducted. Any rebate goes towards paying accountancy bills, insurances, repairs, renewals etc and is allowed for within the projections. It is therefore not a windfall. However if the repayment relates to a pre IVA year any outstanding bills will have been paid or included within the IVA so this money is a windfall.

I am not sure how protocol treats it as we do not operate protocol terms and conditions and regardless HMRC do not like them anyway. We use the R3 T&Cs which state that any tax rebate will be treated as a windfall by HMRC and offered to the supervisor. Usually they send the rebate to us but we forward it to the client but occasionally they send it directly when we advise them we have no interest in the funds.

The only other scheme which is similar is a voluntary scheme operated by fishermen but I have only had two such clients in 16 years!

Thank you Michael. I had overlooked that, being self employed, these things would also have been factored in. Whereas us PAYE bods would lose the lot if it triggered the windfall clause in magnitude.

Exactly. In a PAYE case the money is almost always a windfall. Some firms do try and take CIS rebates which leaves the clients in trouble so hopefully the poster is not with one of those firms.