Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Tax collected twice

22 April 2008
Issue: 4155 / Categories: Forum & Feedback , HMRC powers , Business , Income Tax
Recovering overpaid tax on subcontractors' pay

During the years 2003 to 2005 our client paid several subcontractors without deducting the 18% tax. The payments are now being investigated. HMRC propose to levy a tax charge of 18% on the labour content of the payments.

All of the subcontractors are genuinely self employed have their own accountants and 'unique taxpayer references'. Our client's payments will therefore have been included in their accounts and taxed accordingly.

If HMRC now charge 18% on these payments that they have already taxed on the recipients the department will have taxed the payments twice.

Is there any defence against HMRC's unjust enrichment and will the subcontractors be entitled to a tax credit on the 18% tax charged on our client?

Readers' thoughts and comments are welcomed.

Query 17 189 — Subbed

Reply from Scorpio

Subbed will need to look very carefully at the circumstances where the subcontractors concerned...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon