4% deduction from invoice?

[Evans Electric]

yep, so basically the big rich companies get away with it yet the normal small contractors are stung with it. it also doesnt help that no-one, even HMRC, understand the system

There were two reasons for this carp  appearing .

1)  The 714 system was being  corrupted by  the IRA  on certain projects like the Channel Tunnel .

2)  The government  were short of cash and decided to hit the small  self employed guys , making them virtually PAYE .   AND  not to forget  the payment up front  against money you may or may not earn  in coming year  based on this years earnings .  

 

[Andy™]

Someone  hasn't read the book then Dave .   If you work for them again  add 20%   and double your material content. 

you need to add more than 20% or you still loose out

 

[Evans Electric]

I'm sure you're right Andy ,  the whole scheme is a dog's breakfast. 

Nil returns ...nil returns  ....don't mention bloody nil returns to me ....miss one and its £100 please. 

 

[Risteard]

Risteard  , you can't get Gross Payment terms unless your turnover is above a particular level .

I'm aware of that. That's why I stated "if eligible".

 

[Risteard]

how do you think my two subbies would get on if , at the end of the year , they put their own accounts into HMRC  and then say " You can't deduct tax from us because this unknown builder has deducted it  but we haven't got any proof in writing because we weren't actually working for him  & he doesn't know who we are anyway   but he deducted our tax  "

Because that's not how the scheme operates:

YOU deduct tax from your subbies and provide them with the requisite paperwork for this. However the main contractor still deducts it from the entire payment to you. You simply offset the tax he has taken against the tax you are stopping from the subbies and HMRC gets it. They only get it once, not twice. Your subbies have no dealings with the main contractor. You have a subcontractor relationship with that contractor and your subbies have a subcontractor relationship with you, who is both a contractor and a subcontractor for the purposes of CIS.

It is completely and utterly illegal for the main contractor not to stop the tax in the payment to you if you don't have gross payment status. The fact that you have subbies working for you (or employees, or whatever you have) is irrelevant to the main contractor. He is dealing with you as a business and not as an individual. (The fact that you are a sole trader is not relevant.)

 

[Evans Electric]

Risteard , thats how I did it ... every one paid their taxes .........I resigned from the scheme because of all the paperwork and the threats of being fined for nil returns .  End of.

 

[Mark2spark]

I think everyone was talking at cross purposes but meant the same thing. Main contractor deducts once, from your invoice. (assuming you're not exempt from deductions obviously). Whether you've 'employed' anyone else is irreverent. Hence my 'master & servant' comment.

You can then off set any deductions you've had, against deductions you've made to others, on the monthly settle up with HMRC.

 

[sprocketflup]

Fecking minefield. And apart from all  the thrashing around of workings out, it would have been nice to know either in advance or at the time of payment that they were gonna do this wouldn't it 

 

[Risteard]

it would have been nice to know either in advance or at the time of payment that they were gonna do this wouldn't it 

But you do (should) know, as it is the law. They must do it, and you should therefore expect it without being told that it will happen.

 

[Sidewinder]

This is why I don't "do" CIS!!!

Pain in the proverbial, and if the deductor deducts and doesn't do the rest of their but it still falls on the deductee to pay the tax again, thus paying double.

 

[Andy™]

same here, avoid anything to do with it as much as possible. the only way i would do CIS work is by adding extra on to cover the deductions so i still get paid what it would have been before. tax claimed back would then cover the hassle of it...