Steps - I don't follow. I have subbies I use and I hold an exemption certificate, so pay my tax twice a year, my subbies are 20%, so I pay them less 20% and submit their 20% to the HMRC.
I get taxed on my net profit for my accounting year, less expenditure which includes all labour.
When I invoice my customer its for a total sum and does not outline material or labour content as its a tender sum with interim valuations each month, it's not within my interest to let them know what part is labour or materials as that will expose my margins to other competitors.
Daywork or if it is a materials at cost + then labour, includes for my hourly rate, regardless of what I pay out.
If you have had tax problems in the past I understand its harder to get an exemption, and over the years due to my latish tax payments, which was out of my control I have had mine taken off me, but then appealed and got it back.
I do know a few contractors, that are 20% then 20% from subbies, but this in my mind is not the way to go, as you say tax is going out twice on the same sum of money, although I have heard people say that they put the labour down as expenses/materials, so do not pay tax twice, don't see how that works though.
