Finance Act 2004

62Treatment of sums deductedU.K.

(1)A sum deducted under section 61 from a payment made by a contractor—

(a)must be paid to the Board of Inland Revenue, and

(b)is to be treated for the purposes of income tax or, as the case may be, corporation tax as not diminishing the amount of the payment.

(2)If the sub-contractor is not a company a sum deducted under section 61 and paid to the Board is to be treated as being income tax paid in respect of the sub-contractor’s relevant profits.

If the sum is more than sufficient to discharge his liability to income tax in respect of those profits, so much of the excess as is required to discharge any liability of his for Class 4 contributions is to be treated as being Class 4 contributions paid in respect of those profits.

(3)If the sub-contractor is a company—

(a)a sum deducted under section 61 and paid to the Board is to be treated, in accordance with regulations, as paid on account of any relevant liabilities of the sub-contractor;

(b)regulations must provide for the sum to be applied in discharging relevant liabilities of the year of assessment in which the deduction is made;

(c)if the amount is more than sufficient to discharge the sub-contractor’s relevant liabilities, the excess may be treated, in accordance with the regulations, as being corporation tax paid in respect of the sub-contractor’s relevant profits; and

(d)regulations must provide for the repayment to the sub-contractor of any amount not required for the purposes mentioned in paragraphs (b) and (c).

[F1(3A)Regulations under subsection (3) may include provision authorising an officer of Revenue and Customs to—

(a)correct an error or omission relating to a set-off claim;

(b)remove a set-off claim;

(c)prohibit a person from making a further set-off claim, for a specified period or indefinitely.

(3B)Regulations under subsection (3) that include provision of the kind mentioned in subsection (3A) may, for example, include provision—

(a)allowing the things mentioned in subsection (3A)(a) to (c) to be done by amending a return (including a return not made under the regulations) or otherwise;

(b)allowing a set-off claim to be removed where the claimant is not eligible to make the claim (including where the claimant is not a company, not a sub-contractor, or is registered for gross payment);

(c)requiring information to be given to the Commissioners of Revenue and Customs, at such times as may be specified in the regulations.

(3C)In subsections (3A) and (3B), “set-off claim” means a claim for treating a sum deducted under section 61 as paid on account of any relevant liabilities.]

(4)For the purposes of [F2this section] the “relevant liabilities”of a sub-contractor are any liabilities of the sub-contractor, whether arising before or after the deduction is made, to make a payment to the Inland Revenue in pursuance of an obligation as an employer or contractor.

(5)In this section—

(a)the sub-contractor” means the person for whose labour (or for whose employees' or officers' labour) the payment is made;

(b)references to the sub-contractor’s “relevant profits” are to the profits from the trade, profession or vocation carried on by him in the course of which the payment was received;

(c)Class 4 contributions” means Class 4 contributions within the meaning of the Social Security Contributions and Benefits Act 1992 (c. 4) or the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).

(6)References in this section to regulations are to regulations made by the Board of Inland Revenue.

(7)Regulations under this section may contain such supplementary, incidental or consequential provision as appears to the Board to be appropriate.

Textual Amendments

F1S. 62(3A)-(3C) inserted (6.4.2021 for the tax year 2021-22 and subsequent tax years) by Finance Act 2021 (c. 26), Sch. 6 para. 6(2)

F2Words in s. 62(4) substituted (6.4.2021 for the tax year 2021-22 and subsequent tax years) by Finance Act 2021 (c. 26), Sch. 6 para. 6(3)