CIS changes from 6th APril 2007

Lifeisbutadream

We have a small joinery/building business.

I recieved a letter this morning regarding the changes to the CI, saying that Registration Cards, Tax Certificates and Vouchers will no longer be used.

We have only been trading for a couple of years and I do not fully understand the CIS system anyway. We hold a CIS card in the Partnership, but it is in my DH name, because he is the joiner, not me.

We have only ever done work for one company that took our CIS details, reduced our bill by 20% then didnt even send us any vouchers (this was when we first started trading, so I didnt know that we were supposed to get vouchers - it was for quite a small amount and by the time I found out that we should have got vouchers, I thought it was probably not worth pursuing it).

Anyway, my questions are:-

1. We do quite a lot of contract work - i.e. we project manage extensions/kitchen design and fit etc. using other contractors. Should we be paying the tax for these contractors? This seems like I would be doing all the work for them!!

2. Other contractors use us - i.e. we would go and fit cupboard doors or a floor in a bathroom and then charge the umber, rather than charging the customer directly. Should the plumber be charging us tax? Because we are a partnership and not a sole trader, and also have to pay another sub-contractor from our bill, would this not just confuse the issue???? I send out a bill, it is paid, then I pay my tax when it is due!

3. What do the new changes mean and what should I be doing?

4. How the hell do sole traders manage??? If my DH had to do all his work, plus understand and know how to deal with all this sort of carp, our business would have gone under months ago!!!

Thanks in anticipation. I hope the above makes sense!

Lifeisbutadream

*** Bump ***

Lifeisbutadream

Sorry to keep bumping my own thread. It not only makes me look more popular than I actually am, but it also means that someone who knows the answers might turn up...:D

xpf

I'd also be interested in the answers as my OH has recently set up a joinery business. He's already subcontracted once and had his bill reduced by 20% - do I need to pursue a voucher before it's too late?

Lifeisbutadream

xpf wrote: »

I'd also be interested in the answers as my OH has recently set up a joinery business. He's already subcontracted once and had his bill reduced by 20% - do I need to pursue a voucher before it's too late?

Thanks for helping to bump!

Hopefully one day someone who knows something will come along...

I dont even know how to pursue a voucher, but if you find out, please let me know...

xpf

As he subcontracted for his ex employer, I know how to pursue alright!!

rach29

Hi I don't know if this is of any help to anyone but if you Google for PCG Construction there is a lot of advice available re: the new CIS rules.

I am not involved in this in any way but know about it because my partner is a PCG member on the IT side.

Bean_Counter

As a finance director for a construction company, hopefully I can help.

As you said, the old CIS scheme finished on 5 April 2007. So the old CIS 4, 5 & 6s are no longer valid. I presume that you were an old CIS4?

If you have a look at booklet CIS340 on the HMRC website on this link:

http://www.hmrc.gov.uk/manuals/cisrmanual/Pdfs/cis340.pdf

that goes over it in detail.

On a very brief summary, the onus is on the company making the payment to 'verify' the subbie with the HMRC. This can be either over the phone or on the internet. HMRC then say whether tax should be deducted at 0%, 20% or 30% depending on their status. Payment can then be made.

Also vouchers are no longer produced (annual returns have also gone.) These are replaced with monthly returns (either paper or on-line) together with monthly subcontractor statements.

One thing HMRC are really cracking down on is whether subbies are actually employees and should be taxed accordingly rather than treated as self-employed. This is particularly the case for labour only subbies.

To go back to your initial point, the onus is on the person paying you to get the tax status and deduction correct. They should then send you a statement on a monthly basis showing any tax deducted. You cna then offset that tax against any tax you are due to HMRC.

This is only really a starter to see if I am in right direction on this. Have a look at the booklet and see if that helps.

Please come back to me with more queries as there is a lot to it and I am happy to help.

rach29

https://www.pcgconstruction.org.uk/cms/index.php?option=com_frontpage&Itemid=1


Found this link if it's of any use to anyone.