Self Employment & CIS deductions

strimmerman

I wonder if anyone can help me with this question

My OH is Self Employed (S/E) and has never needed to hold a CIS card as he never sub contracts from anyone.

However typically just when BR hits it gets complicated.....he is currently working on a job where the person whose job it is (Man A), is paying the bloke (MAN that got him the job. Man B gets a couple of hundred quid a week, that he added on for his cut...so to speak. Man B's accountant has told him today that my OH will need to get a CIS card as basically he is subcontracting from Man B.

We have our OR interview next Wednesday......what I am trying to understand if we have to go down the CIS route how it works in terms of Nil Tax coding.....obviously he will have either 30% (before the relevant numbers arrive) or 20% (once all numbers are in place automatically deducted at source). Is there such a things as nil tax coding for the CIS scheme in relation to BR. Also as far as I understand it if a Nil Tax coding is given then this money is supposed to be for the offical reciever to collect towards the BR debts.

The job will last proably for the next 5/6 weeks and on past finance this will proably mean at the end of the tax year applicable that my OH will on the basis of his accounts not be required to pay tax at all or a negligable amount. But along the way will have had to have the 20/30% deducted from him. Normal procedure obviously for any CIs worker would be at the end of the tax year that they would then claim a rebate back from the Tax man as they will have had money deducted under the CIS scheme that obviously was not due in Tax. In normal PAYE my understanding is that any money from your NIl Tax coding has to be paid to the official reciever and that is the idea of a Nil Tax code.....what happens in S/e?

Obviously these accounts do not have to be submitted to HMRC until Jan 2010 as they are for this Tax year April 08 -April 09 and assuming everything goes according to plan we would be discharged after a year of BR on 6/11/09.

Does that mean that as we would have been discharged by that time that this would not even be aplicable to the OR. If we had an IPO (not really expecting to get one initially)in place would this would then have to then be declared as income (even though it isn't) and could they then say in the month that the rebate was issued "oh look you have more money you have to pay us x% of that"? When really the money we would get back would actually be money that we did not actually owe to HMRC in the first place but was just deducted in occordance with the payments rules surrounding the CIS scheme. So was not actually anything that we shouldn't have had for day to day living in the first place.

I have tried BDL and IS to ask this as I really didn't want to have to ring the OR office about it. BDL were unable to help and told me to ring HMRC and IS told me I had no option but to ask the OR.

The crux of all this is that the job is a long way from home and the fuel cost to get there is quite high.....it will be bad enough losing a 20/30% amount off of the wage he is being paid....but even worse if we then found that this was lost forever to the OR. At at the end of the day is it really worth carrying on working on the job or should he throw the towel in and try to find something closer to home and not the subject of CIS.

If he does throw in the towel this will seriously affect the way we have started working out our SOA and will actually put us into a deficit when we have to show the OR next week. Hence the fact that I don't really want to talk to the OR's office about it. As I understand it you have to inform the OR of changes to your circumstances within 21 days.....so if we could get over next week on the basis we were working on till we discovered this issue an hour ago then if he did have to decide to leave the job it would then give him time to leave and find something else and maybe not actually have a change in our income so the OR would never have to be informed of any changes.

What will happen if we have to decided to take the CIS route are in a monthly deficit when we see the OR? Do they look on this very badly.

Just when I thought it would all be simple......another thing jumps up to stress us all out.

Hope someone has some knowledge fo this.

Thanks

Sunk

My partner holds a CIS card & is deducted at source, so no nil tax code.
When he asked the OR she said it was a grey area.
We have received no advice really from OR regarding CIS.
All my partner did was send off the last 3years tax returns (he has no accounts/or accountant).
He has now filled a form in for early discharge.
His next tax returns will be put in Jan 09, so anything from May08 (BR date) to April 09 when he hasn't sub-contracted the full tax will be payable.
This is what we have been led to believe.

maxmycardagain

why cant your OH simply invoice your man for his dues, hes s/employed.., even more applicable if your OH is vat regd...

strimmerman

why cant your OH simply invoice your man for his dues, hes s/employed.., even more applicable if your OH is vat regd...

maxmycardagain) No he is not VAT registered and did you mean invoice Man A (the man who commissioned the job) or Man B (the man who recommended us and secured the job)? If you mean Man B....no idea it is a job that will be no more than 8 weeks and his accountant has suddenly decided this. If you mean Man B for the reasons discribed in this and previous post.

It appears that Man A is not really aware that Man B is taking a cut of what he is paying for my OH......we have no objections to Man B telling Man A whatever rate he wants as long as my OH earns what he would expect to to do the job.

The only way round this I can see is to get paid direct from Man A. If we did that then there would be no CIS issue involved. So the only thing I can think of is that Man B tells Man A whatever he wants surrounding the fact we have financial probs and that he would be really grateful if he could pay two payments each pay day 1. to us for £x's which is what my OH should have earned and 2. to Man B for £X's whatever the difference is and hpe he will oblige.

No-one would be doing anything wrong that way and my OH would be earning what he expected/should do for the job but simply avoid getting involved in CIS.

Sunk - if the OR doesn't know then who does....it is not really very helpful for people like you and I is it. I was hoping to go for the OR meeting next week and it to all de done and dusted but judging by your reply if this CIS thing happens then it will no doubt be a " we will get back to you". Did you mean that when he went to the OR he had not done his tax returns for the last 3 years? Completed them after seeing the OR and sent them off. If so what did the OR have to say about him not having completed his tax returns? If you don't mind me asking about the early discharge was his biz quite straightforward and was the debt situation quite starightforward.....I had thought that the biz side of it would be something that would hamper early discharge no help lol.....so at least you have given me a glimmer of hope...although I know every case/OR is different. Surely the Or should get their act together and make rules surrounding this.....we can't be the only 2 people in the country in this position.

Thanks both for your replies

maxmycardagain

invoice whoever is paying your OH, then HE invoices the main man

strimmerman

MAX - that is what has been happening for the last few weeks......until this morning when he announced that his accountant has told him to tell my OH to get a CIS card.

However I think 1 call to HMRC has cleared it up in terms of payments....whichever one of them pays him should deduct CIS as it is a development of a house not just the persons own house so therefore falls under CIS. Whichever way we have just lost a considerable amount of income per week.

Will be interested in developments when OH talks to them later as I don't get the impression the main man has been deducting anything from any contractor he has used on the job, which was a house built from scrtach, so he will be in trouble anyway.

After another call and another false name lol......I have clarified that we would not be penalized for his !!!! up and would just include the monies paid in our normal tax return.

Of course him deducting CIS from us is dependant on him actaully implementing the deduction and if he doesn't well thats not our fault we are hardly going to give him the 20/30% back and tell him to pay it to HMRC when he could in effect pocket it - never get found out and -not pay it to HMRC.

As an aside does anyone ever just get the engaged tone when calloing their OR. I have had to email to ask them to call us as we can't ever get through to them and need to speak to them about our appt next week.

maxmycardagain

does your accountant realise you wont be paying him?........

strimmerman

wot accountant......we dont have money for such things

Sunk

strimmerman wrote: »

Sunk - if the OR doesn't know then who does....it is not really very helpful for people like you and I is it. I was hoping to go for the OR meeting next week and it to all de done and dusted but judging by your reply if this CIS thing happens then it will no doubt be a " we will get back to you". Did you mean that when he went to the OR he had not done his tax returns for the last 3 years?
My partner had an interview over the phone, the OR asked for accounts, my partner said I don't have any all i have is 2years tax returns which would be 2005/2006 & 2006/2007, that's it.
She said to send them off.
haven't heard anything in fact it looks like my partner will be discharged after 5/6months same as me.

Completed them after seeing the OR and sent them off. If so what did the OR have to say about him not having completed his tax returns?
Nothing.

If you don't mind me asking about the early discharge was his biz quite straightforward and was the debt situation quite straightforward.....I had thought that the biz side of it would be something that would hamper early discharge no help lol.....so at least you have given me a glimmer of hope...although I know every case/OR is different. Surely the Or should get their act together and make rules surrounding this.....we can't be the only 2 people in the country in this position.

Thanks both for your replies
Well not sure if it was straight forward?...partner owed 6,000 in tax & 65,000 in other debts.
Nothing has been said, the only time the OR has spoke to my partner was at the interview stage & he has heard nothing since except a form to fill in for early discharge & another form saying they have finished their investigation.
So as regards to tax it certainly is a grey area...

good luck......