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Thread: Accountancy Question . Specifically CIS

  1. #1
    Master thegoat's Avatar
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    Accountancy Question . Specifically CIS

    A thing that has been bothering me for a while and it kind of came to a head with the realisation that any government assistance is pretty much dead in the water.
    My business is 95% labour only . I subcontract to various companies who subtract my 20% CIS tax at source.
    I have two guys who work with me , but aren’t employed by me , so are subcontractors in their own right.
    My issue is that after the initial CIS tax has been deducted, I’m then paying it for the two guys.
    My argument is that surely the labour element has already been deducted from the initial price of the work . This is something that I can’t get my head around . I’ve spoken to HMRC , who were less than helpful and even my bookkeeper was unsure .
    Whilst things were good, I kind of buried my head in the sand but I’m thinking now that if Im overpaying the tax , I should explore avenues to recoup what I’ve put in.

    Bearing in mind that most months , my CIS bill is upwards of £800 ( after the initial deductions) it still rankles me .
    My thinking is that if I made the two guys partners in the business , then the extra CIS bill wouldn’t be applied.
    For info, I’m a sole trader , not limited .
    Over to you guys .

  2. #2
    Master
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    Best advice Lee is speak to a decent accountant used to dealing with it, personally I think you’re over paying/paying twice. My lads where always paid gross and left to sort their own taxes out so I’ve no experience I’m afraid.

  3. #3
    Master thegoat's Avatar
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    Quote Originally Posted by bootneck View Post
    Best advice Lee is speak to a decent accountant used to dealing with it, personally I think you’re over paying/paying twice. My lads where always paid gross and left to sort their own taxes out so I’ve no experience I’m afraid.
    Cheers Steve.
    I’ve come to the realisation that my accountant is next to useless . I did ask at another accountants office I was working at and , they too seemed unsure.
    How’s things with you ?
    Hope you’re well you Scouse c##t .
    I hear your reputation precedes you on the Mcr gettogether 😂. Be good to catch up soon.

  4. #4

    Accountancy Question . Specifically CIS

    You need gross payment status. Hope that helps.


    Quote Originally Posted by thegoat View Post
    A thing that has been bothering me for a while and it kind of came to a head with the realisation that any government assistance is pretty much dead in the water.
    My business is 95% labour only . I subcontract to various companies who subtract my 20% CIS tax at source.
    I have two guys who work with me , but aren’t employed by me , so are subcontractors in their own right.
    My issue is that after the initial CIS tax has been deducted, I’m then paying it for the two guys.
    My argument is that surely the labour element has already been deducted from the initial price of the work . This is something that I can’t get my head around . I’ve spoken to HMRC , who were less than helpful and even my bookkeeper was unsure .
    Whilst things were good, I kind of buried my head in the sand but I’m thinking now that if Im overpaying the tax , I should explore avenues to recoup what I’ve put in.

    Bearing in mind that most months , my CIS bill is upwards of £800 ( after the initial deductions) it still rankles me .
    My thinking is that if I made the two guys partners in the business , then the extra CIS bill wouldn’t be applied.
    For info, I’m a sole trader , not limited .
    Over to you guys .

  5. #5

  6. #6
    Master
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    Quote Originally Posted by thegoat View Post
    A thing that has been bothering me for a while and it kind of came to a head with the realisation that any government assistance is pretty much dead in the water.
    My business is 95% labour only . I subcontract to various companies who subtract my 20% CIS tax at source.
    I have two guys who work with me , but aren’t employed by me , so are subcontractors in their own right.
    My issue is that after the initial CIS tax has been deducted, I’m then paying it for the two guys.
    My argument is that surely the labour element has already been deducted from the initial price of the work . This is something that I can’t get my head around . I’ve spoken to HMRC , who were less than helpful and even my bookkeeper was unsure .
    Whilst things were good, I kind of buried my head in the sand but I’m thinking now that if Im overpaying the tax , I should explore avenues to recoup what I’ve put in.

    Bearing in mind that most months , my CIS bill is upwards of £800 ( after the initial deductions) it still rankles me .
    My thinking is that if I made the two guys partners in the business , then the extra CIS bill wouldn’t be applied.
    For info, I’m a sole trader , not limited .
    Over to you guys .

    I had this years ago under the old 715 certs , HMRC and accountant were adamant this is how it works, very unfair,but i did get a colossal rebate as i had 11 guys working for me.

  7. #7
    Master
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    As a subcontractor you bill the contractor for the full amount and the tax deducted is allowed as a credit against your SA tax bill.
    As a contractor you then deduct from the payments you make to your subcontractors and that is deducted from your business income in calculating your profit (and allowed as a credit against their SA tax liability).
    As mentioned you could apply for gross payment status to help with your cash flow, if you meet the criteria, but the net tax you pay would be the same -
    https://www.gov.uk/what-you-must-do-...payment-status



    Sent from my HD1903 using Tapatalk

  8. #8
    Master
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    Quote Originally Posted by thegoat View Post
    Cheers Steve.
    I’ve come to the realisation that my accountant is next to useless . I did ask at another accountants office I was working at and , they too seemed unsure.
    How’s things with you ?
    Hope you’re well you Scouse c##t .
    I hear your reputation precedes you on the Mcr gettogether . Be good to catch up soon.
    Yeah new accountant needed mate. All good thanks mate yeah the MCR gettogether weren’t ready for my shy and retiring ways good laugh though lol.

  9. #9
    Quote Originally Posted by deepreddave View Post
    As a subcontractor you bill the contractor for the full amount and the tax deducted is allowed as a credit against your SA tax bill.
    As a contractor you then deduct from the payments you make to your subcontractors and that is deducted from your business income in calculating your profit (and allowed as a credit against their SA tax liability).
    As mentioned you could apply for gross payment status to help with your cash flow, if you meet the criteria, but the net tax you pay would be the same -
    https://www.gov.uk/what-you-must-do-...payment-status



    Sent from my HD1903 using Tapatalk
    I think the op is concerned that when he gets paid from his invoices, the element that he pays to his subbies has already been taxed at 20% before it goes through his business.

    If he has the gross amount - he would be up 20% of what he uses to pay them (this would be taxable profit, but overall he would be better off) - is he incorrect in this thinking?

  10. #10
    Master
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    Quote Originally Posted by Mr G Imp View Post
    If he has the gross amount - he would be up 20% of what he uses to pay them (this would be taxable profit, but overall he would be better off) - is he incorrect in this thinking?
    Better off in the short term from a cash flow perspective but his tax liability at the year end would be the same (with him paying more tax then, or receiving a smaller repayment due to less tax credits).

  11. #11
    Master Tony's Avatar
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    Quote Originally Posted by bootneck View Post
    new accountant needed
    It sounds like this is accurate.

    My wife is a chartered accountant and has picked up a lot of work from people recently who realised that those who they were employing as accountants were really just book-keepers who were adding numbers up and uploading accounts. They've been useless in the crisis.

    Recent circumstances has shown that if you want a proper accountant you need to pay for one. They've been worth their weight in gold lately.

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