self assessment -who knows about cis tax refunds for subcontractors!

gemmataxnovice

I hope somebody out there can advise me on this subject and would especially like to here from anyone who works for any of these cis refund specialist companies advertised all over the papers and the web! ( google 'cis refunds' and they all pop up)
firstly I am a registered agent but only have 9 clients who I help out for free every year with their returns - i.e. friends/family etc, recently my hubby has changed his job (still a subcontractor taxed under cis deductions) and now works with a large contractor who use 200 plus other subbies who my hubby now mixes with on a daily basis (easy access to potential large market of clients). He has asked quite a few of his colleagues who actually does their tax returns for them each year and approx 80% of them use various 'tax refund specialists' who charge really quite a significant sum either in a % form as a fee or a fixed fee ranging from £140 - £300.00. Have been doing some research and think I could happily undercut these rebate companies and get quite a few clients as my hubby works with them.
However how do these 'rebate specialists' avoid the crazy delays of the 'repayment security checks' that I have got stuck with in the past -especially the ones that go to the black hole of the Bristol repayment security team? Looking at these rebate companies they quote on their websites that they use 'special software and their relationship with hmrc to ensure a faster repayment' - is this nonsense or true?
Before taking steps further and acquiring clients on a paid for basis I am trying to minimise the risk of any new client having to wait weeks and maybe months for their rebate....as this will make me look unprofessional and my hubby being questioned to why their mate used such and such company and only waited 3 weeks and I’ve been waiting over two months etc.
As far as I’m aware all I can do (don't know if it makes any difference) my end will consist of the following:
1) Have a 64 - 8 in place
2) make sure I have all their year’s earnings and cis monthly tax statements and they are all 100% accurate
3) Any repayment due from hmrc will go directly to separate dedicated client account (business account set up by me)
4)use professional tax agent software (i.e. taxcalc, sage,ptp etc)
5)when filing electronically use only a static ip address (no dongle or internet shop) - don’t know if this is nonsense but heard from an accountant friend because of fraud in the past returns received by this method are more scrutinised (who knows?) but sounds plausible (he doesn’t do subcontractor refunds or knows anything about cis!)



Absolutely any advice / guidance welcome.....thanks for reading....gem

gemmataxnovice

thanks for the link but thats just basic info about cis deductions etc, what i am trying to establish is how these 'rebate specialists' manage to process lots of self assessment tax returns and seem to deliver the rebate to the client very quickly (is there a magic formular they use?) as pretty much all the cis subcontractor returns i have done in the past which usually result in a large repayment due - end up being stuck with hmrc while they do 'security checks' and we end up waiting at least 2 months to get the repayment. I dont want to offer say a tax return service where i estimate for the client a 3 to 5 week turnaround service, for them to receive their tax rebate when they end up having to wait 3 months plus! I am all ears!

chrismac1

I can tell you what I do, happy to talk it over with you by phone. I've never had a CIS delay of any description, sound to me like these guys are dressing this up to sound a lot more than it is. The hard yards in CIS are where you are a CIS contractor and this is something I would advise not going into lightly. There is much less risk with a sub-contractor, the delays normally arise because the contractor has been slow paying or not filing properly. HMRC in Northern Ireland then take it into themsleves to block repayments to the subbies even though it is no fault of theirs, so they become the victims for months and months. I am not sure what any tax agent can possibly do about that.

In terms of getting quick rebates, any efficient client of mine will have his or her rebate by 19 May 2012:

1. I already have all their accounts for the 2011-2012 return issued except where the year-end is still in the future.
2. For the larger ones with March year-ends I keep on top of things quarterly so there is only 3 months to add in April to knock out the accounts.
3. So apart from the March year-ends, in April all I need from everyone is the last few months' of CIS deductions. Regardless of choice of year-end the CIS deductions are claimed from 6 April to 5 April.

All of this means that as soon as the HMRC database awakes from its 3 or 4 day slumber in April 2012, I'll be hitting it with CIS tax reclaims for 90% of my CIS clients. (Other repayment clients are on the same level of priority.) So money back to their bank accounts in May.

chrismac1

I also think you'll get a load of useful information on the AccountingWEB site. There is a whole section dedicated to CIS accountants, join it! So although I personally have not encountered payment delays to clients, I know plenty of people online who have and have some idea of what methods I can use to prise the money out of the greedy mitts of HMRC.

Pennywise

There is no "magic" way of ensuring that refunds are made quickly. The dreaded security checks and the well known CIS delays can happen to anyone. In my practice, we have only maybe 1 or 2 delayed refunds each year, so it's not a major problem for us. However, we certainly don't go around promising it won't happen - we make clients aware it is a possibility and tell them not to rely on a quick refund.

We try to avoid any reason for delays by:-

1. Ticking the box to ask for refund by cheque, NOT transfer to either client or our bank account.
2. We fully reconcile the CIS deductions and provide full details/listings in the white space or as an attachment.
3. We make sure that any changes to the client address is advised to HMRC as soon as it happens, i.e. not tell them address changes on the tax return itself.
4. Make sure all tax returns pass a "sanity test" - i.e. that the declared income and expenses make sense and look reasonable - we make extensive use of white space to explain any figures that look strange.

The above method has resulted from us reviewing the past delay cases and trying our best to work out why the delays occurred. It became apparent that asking for bank transfer refunds, especially if there'd been a change of address, did increase the risk of delays!

Back to your idea, though, those prices you quote don't seem to be high - in fact, in some cases, they could seem quite cheap. They may be OK if you get perfect records from the clients, but back in real life, you're more likely to get random pieces of paper, some missing, some that don't tie up properly, etc., so you could easily spend 2 or 3 times more time sorting out the carp handed to you. I think you'll find that your current clients are making an effort for you because you're doing it free and are family/friends - out in the real world, fee paying clients won't be so accommodating.

Have you also factored in the costs/red tape of running your practice, i.e. registering with HMRC under money laundering regs, PI insurance, training (required under money laundering regs), software, computers, data backup, office costs, etc. I can't help but think once you've set up "properly" you'd have to charge the same kind of fee you currently regard as expensive to cover your costs and turn a profit.

chrismac1

I missed that bit about fees. Mine range from 150 to 450 plus VAT for a set of accounts and tax return or returns. The variance depends on:

1. Volume of transactions if I am doing the book-keeping.
2. Whether the client is keeping records on Excel or just very good written ones.
3. My perception of the client, this is a sector which attracts people who seem fundamentally incapable of getting bank statements and filing them every month, for example - never mind keeping proper expenses records.
4. If it's sole trader or partnership.

Good advice from Pennywise on the red tape. it often seems that the main objective of the UK public sector is to ensure that it is as hard as possible for the rest of us to grow the economy, just glad I don't live in Zimbabwe or Russia I'd probably just take some pills rather than pay all the bribes to run a business there.

gemmataxnovice

Thanks for both your input .....finally some peolple that know what im on about! Joined both accounting web and book keepers forum and posted the same question but no decent replys unlike on here (strange as thought i would get a better response on the accounting sites!)

With regards to gaining more clients most subcontractors like the benifit of having 'no up front fees to pay' which i understand so that would mean either a dedicated client account (assuming a decent business account would be good enough to use, especiallly as it will be called 'client account' when opened. Or stating on the return the repayment be made by payable order to the registered agent (me) again paid into a business account. Downside is the timescale waiting for it to arrive and then clear before taking my fee out and forwarding the repayment to the client. Bacs repayment to agent is preferable but whats the point if they all get stuck for 'security checks' for months....if this is avoidable by requesting a payable order.
Looking at some of the forms downloadable from other 'rebate companies' - (hopefully one day my competition) i have seen mandate forms written by these rebate companies (seems to be a legal form that the client signs approving the repayment does go to the agent). My question to those in the know is does a copy of this mandate form have to go to hmrc and if so which department / address? 64-8 address?
Does make sense if only a 64-8 in place and no mandate in place there is more chance of a delay in the repayment going to the agent as further security checks may be required.

Thanks for the tips so far and keep em coming!

chrismac1

I only ask for direct payments back to me where I perceive a credit risk or there is a history of slow pay. So I've had various refunds on CIS, corporation tax and self-assessment with no problems so far. You don't need a separate mandate sent to HMRC, it just gets processed to the sort code and account number on the return.

antonic

HMRC will only speak to you about a client IF they have a 64-8 on file

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?formid=14&record=cZuAgB_KEpk

These can be filed online (which they prefer) OR by post to here :

http://www.hmrc.gov.uk/news/changes-taa-reg-sa.htm

If there isnt one on file you will fail security and they wont speak to you.

Hope this helps !

gemmataxnovice wrote: »

Thanks for both your input .....finally some peolple that know what im on about! Joined both accounting web and book keepers forum and posted the same question but no decent replys unlike on here (strange as thought i would get a better response on the accounting sites!)

With regards to gaining more clients most subcontractors like the benifit of having 'no up front fees to pay' which i understand so that would mean either a dedicated client account (assuming a decent business account would be good enough to use, especiallly as it will be called 'client account' when opened. Or stating on the return the repayment be made by payable order to the registered agent (me) again paid into a business account. Downside is the timescale waiting for it to arrive and then clear before taking my fee out and forwarding the repayment to the client. Bacs repayment to agent is preferable but whats the point if they all get stuck for 'security checks' for months....if this is avoidable by requesting a payable order.
Looking at some of the forms downloadable from other 'rebate companies' - (hopefully one day my competition) i have seen mandate forms written by these rebate companies (seems to be a legal form that the client signs approving the repayment does go to the agent). My question to those in the know is does a copy of this mandate form have to go to hmrc and if so which department / address? 64-8 address?
Does make sense if only a 64-8 in place and no mandate in place there is more chance of a delay in the repayment going to the agent as further security checks may be required.

Thanks for the tips so far and keep em coming!

gemmataxnovice

thanks antonic but i am already a registered agent and know all about 64-8s etc as i have clients already but i want to expand - the whole point of me posting is regarding the repayment issue within self assessment and the delays with receiving the money from hmrc - there will be lots of subbies this year due large tax repayments due to several reasons including the work climate/ increased personal allowance and business related expenses- increased fuel costs etc) the issue i have is lots of these rebate specialists attract a lot of business as they provide a fast repayment service (most quote 2 -4 weeks from submitting the return online). In my and in many other peoples experience obtaining tax repayments through the self assessment system for the last 2 years have met with crazy delays (months).....the issue even made it to watchdog a while ago! Simply want to cut down the risk of facing these delays so i can start charging clients a reasonable amount while offering a similar type service. And due to my hubbies job position i have a large market of clients hopefully coming my way.

If there are any posters who work for any tax rebate specialists or deal with lots of cis repayment cases - would like to here from you ....private message me if nessesary. :T