CIS - how do you handle it?

[AndyV]

Being a newbie to tiling and the industry in general, I was wondering how you guys tackle the Government CIS scheme, since tiling seems to come under 'decoration' and therefore deemed to be part of construction.

CIS seems to apply to if you are being sub'd work by, say, a building, kitchen or bathroom company who are paying you (as opposed to getting the customer to pay you directly) - what is the general rule of thumb here - does the building company deduct the 20% tax, or do you recommend opting out of that and paying it yourself?

Secondly, say I got a big project and wanted to sub it to another tiler - who I would pay - what do you guys do in this sort of case - again do you go through the faf of doing all the paperwork and deducting 20% tax, or do you expect the sub'ing tiler to have opted out, and therefore deal with the tax issues themself?

Or do you just stay clear of this and not bother registering for CIS!

I've hired builders and trades in past as a domestic customer and can't image any of them bothering with CIS!

Any thoughts or advice would be gratefully received.

 

[Andy Allen]

Not 100% sure but I've done work for builders in the past and just invoice them when finished and they pay me the full amount and it all gose through my accounts out the end of the year.
I don't have a CIS certificate and have never been asked for it on private jobs or any jobs working for small building firms.

 

[AndyV]

I kind of thought this might be the case. I'm used to commissioning 'freelance' work of another nature, but to have to worry about deductions etc etc seems to be counter productive - it's just HMRC putting another hurdle on those easy to get to

 

[Spare Tool]

Usually depends on the size of the outfit, in my exp larger builders will insist on using cis scheme and deduct the 20% before paying you, they should then issue you with a voucher at the end of the month showing what they deducted, this you keep till end of tax year then when filling in your tax return theres a separate section for c.i.s to input amounts, this then gets knocked off your tax bill...
If you want to do site work and haven't registered with the cis scheme the builder will take out 33% as an emergency code.
I quite like it actually and can't see what's not to like about it, at the end of the year you still end up paying the same amount to hmrc
Can't tell you about subbying payments though cuz never employed anyone..

 

[peteablard]

There's no opting out, it's compulsory. Even smaller firms should by law deduct 20% of labour costs you invoice them. The whole idea of it is to stop the amount of cash in hand work that went on in the construction industry. If you want to start using subcontractors then it becomes a bit more complicated. The best way is to register with HMRC for gross payments but for that they need 12 months accounts and you have to have turned over more than £45K (I think). Your UTR number stays the same but you can legally get paid the full amount you invoice. You then need to get your subcontractors UTR number, register it with HMRC and then deduct 20% of their labour charge and pay it to HMRC. You then have to fill in a subcontractors return every month even if you haven't used one. There's a lot of extra paperwork involved. If you are not registered for gross payments then you will have 20% of your labour charge deducted and you then have to deduct 20% of your subcontractors labour charge which ties up a lot of money until you can claim it back on your tax return.

 

[Andy Allen]

Dose that mean a small building firm shouldn't even employ your services if you don't have a CIS certificate? Even if it's just on an extension they built for a private punter ?

 

[peteablard]

Technically yes Andy. If a builder is paying you to do a job then my understanding is deductions should be made. Smaller firms will probably get away with it but if they ever got checked by HMRC they'd be in trouble

 

[Andy Allen]

Have to admit every builder I've done work for has just paid my invioce and never asked to see a CIS certificate. (ain't got one anyway)
Is it not different as your not subcontracting to them on a regular basis?

 

[Spare Tool]

Have to admit every builder I've done work for has just paid my invioce and never asked to see a CIS certificate. (ain't got one anyway)
Is it not different as your not subcontracting to them on a regular basis?

Its not a certificate Andy its just a UTR.. (unique tax reference number) that you need to give them

 

[peteablard]

I don't think so Andy, realistically there will be other trades they are using and should be making deductions for. I imagine there will be a lot of builders that would just plead ignorance if they got caught.