CIS Scheme

[The Goose]

Really sorry for the long, probably stupid question................

After a bit of advice about dealing with the CIS scheme from both sides of the fence please.

I did a job for someone the other day and he wanted to pay me the invoice amount but less tax. From a brief look on the www it appears that at first it will be 30% deduction then lowering to 20%.

The problem is that there are the cost of materials as well which he says is part of the total and will therefore be deducted 30% from as well as the labour.

So as an example boiler £1000, labour £200 so £1200 total. £360 deductions for tax means that the job will cost me £160 to do it! I dont think this is right but he and his mrs (accountant) are adamant that it is.

How about if I got someone to help me out for the day. Is that the same ie me having to pay their tax?

What types of jobs are covered? And/or not covered by this? He says everything is covered but I am not convinced!

Is there any way around this as I would much prefer to deal with it myself if at all possible.

Thanks in advance for any replies :teeth_smile:

 

[Atouchofgas]

Nope split the bill into labour and materials, only get deduction on labour. He should also give you a statement to say that he's paid the cis. Are you employed as a subbie?

 

[Deleted member 7121]

As above dead right

 

[Masood]

First off - you both need to be registered under CIS. Him as a contractor, you as a subcontractor, and you must have a UTR (Unique Taxpayer Reference).

Then, as stated already, you give him an invoice splitting labour and materials. He deducts tax from the labour component ONLY, and pays you the rest. He MUST give you a statement of deduction and pay your tax deduction to HMRC on your behalf.

The tax rate is 30% for those who have not registered as subbies. Normally if you're registered and have your UTR then he can verify you on the HMRC website or phione the helpline, get a verification number, then he needs only deduct at 20%.

Here is the HMRC template for the deduction statement, which makes it very clear that only the labour is taxable:

https://www.gov.uk/government/uploa...le/375454/cis-payment-deduction-statement.pdf

If his missus is an accountant she is incompetent.

 

[T & H Plumbing]

Sounds like there trying to have your pants down lad

 

[snowhead]

Anyone with a milligram of sense could see that this situation is wrong.

Even if the O.P presented a single invoice the other party and especially his "Accountant" wife should have advised it be split Materials and labour, he would have known the O.P had supplied materials.

 

[Masood]

PS - if you're unsure of anything, ring the CIS helpline. They are approachable. I know CIS very well now from both sides of the fence (mainly as a contractor now rather than subbie), but when I first had to get my head around it, they were incredibly helpful.

 

[leelister6]

As above, he's trying to take the pi$$! From what you're saying, they're just trying to get job for 30% less than you've quoted. Unless you're doing a lot of work for them as a subbie, it's not worth it in my opinion. If they push it, tell her you're reporting her to the accountant police and watch her back pedal!

 

[hammers4spanner]

Your being mugged off mate he won't pay your tax at all ask him for remittance advice . 100% you won't get that just the full sum and pay tax yourself .

 

[joni os]

If he can't get it right he's probably not registered as a contractor in which case he pays full invoice just as any other householder. Even if he is registered it should only apply to work connected to his business as a contractor not to his private residence. play him a his own game and ask for his tax reference. The tax man takes a hard line on those who deduct tax and don't pass it on.

 

[AWheating]

Put a mark up on the materials if your supplying them, the receipt belongs to you not him, your invoice with materials cost is his receipt.

You will pay 30 emergency tax until you have your utr number as stated above. Make sure he give your your statement detailing the amount of tax he has paid on your behalf.

if it seems dodgy ask the Hmrc if he's registered.

 

[Masood]

If it seems dodgy ask the Hmrc if he's registered.

I would second that. Ask for his employers tax reference number and ring the CIS helpline to check whether he's registered as a contractor...

 

[The Goose]

Thanks guys. It did seem a bit odd to me!

I only did a few small jobs for him and doubt I will be doing any more. He is one of those builders who seems to just lie to customers etc all the time and if im honest thats not really me or how i like to work.

I was reading a few links from this site this morning and it seems that the type of work you do seems to affect this ie installing stuff from scratch over a minor repair or rad, boiler replacement. Does anyone have any experience of this as i could not really find a definite guide.

 

[Atouchofgas]

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/424127/cis340.pdf

 

[Fallon1982]

He's definitely trying to have your pants down mate! Don't work for him again as sounds like a crook!

 

[Masood]

Thanks guys. It did seem a bit odd to me!

I only did a few small jobs for him and doubt I will be doing any more. He is one of those builders who seems to just lie to customers etc all the time and if im honest thats not really me or how i like to work.

I was reading a few links from this site this morning and it seems that the type of work you do seems to affect this ie installing stuff from scratch over a minor repair or rad, boiler replacement. Does anyone have any experience of this as i could not really find a definite guide.

CISR14090 - The Scheme: construction operations: building service systems

In a nutshell, it boils down to whether you're installing "systems" or not. If you put in full CH, then yes, it's in cope for CIS. If you're just replacing a boiler, or adding a couple of rads, then no.

"Even where the repaired/replaced item may represent a significant component part of the overall system, such as a central heating boiler, its replacement does not constitute ‘the installation of a system of heating’ and therefore will not fall within CIS." (from the link above)

However, beware - any "making good" of the building falls within scope of CIS, and if one aspect of the job is in scope, the whole contract must be treated as in scope.

It's safest to do everything via CIS then you can't be caught out.

 

[The Goose]

CISR14090 - The Scheme: construction operations: building service systems

In a nutshell, it boils down to whether you're installing "systems" or not. If you put in full CH, then yes, it's in cope for CIS. If you're just replacing a boiler, or adding a couple of rads, then no.

"Even where the repaired/replaced item may represent a significant component part of the overall system, such as a central heating boiler, its replacement does not constitute ‘the installation of a system of heating’ and therefore will not fall within CIS." (from the link above)

However, beware - any "making good" of the building falls within scope of CIS, and if one aspect of the job is in scope, the whole contract must be treated as in scope.

It's safest to do everything via CIS then you can't be caught out.

Thanks everyone.

It now makes a lot more sense and is clear in my head what to do for next time.