Self employed carpenters

landa7719

Hi there, I’m unsure what to do on my tax return as my friend and I work for various companies but they use just my utr for the tax and the earnings are paid into my bank account and I just transfer him his half. Do I put it all through my tax return or should I just put through my half. We are not a company or partnership as we work independently too with different companies. Any help would be appreciated 

oldbikebloke

please educate yourself on the role and responsibilities of a GANG MASTER because that is what you are under the CIS rules 
https://www.gov.uk/what-you-must-do-as-a-cis-contractor/who-is-covered-by-cis

whizzywoo

Are you a sub contractor using the CIS scheme?

The money you pay your friend is a business expense for labour.

But if you have been paid by the main contractors under the CIS scheme then strictly speaking you should have been deducting tax from the money you have paid your friend and paying it over to HMRC.

I suspect you've made a bit of a mess of things. Get yourself an accountant to help you sort it out.

landa7719

No we are both sole traders. Tax is stopped at source

whizzywoo

Yes you are both sole traders but you are also subcontractors working under the CIS scheme which deducts 20% at source.

Does your friend have his own sub contractor's certificate?

Why has all the money been paid into your bank account and not paid into your own separate business bank accounts?

Are all the CIS vouchers for the tax deducted in your name only?

landa7719

we both have our own utr numbers, the companies we work for all pay one person as it’s  how they have always done it. I invoice for x amount for both of us and the tax is taken solely from that and the net paid to my bank account. Are they turning me over doing it this way. I/we have never registered under the Cis scheme

whizzywoo

Has this been going on for a few years?
How do you account for the tax deducted from your income when you complete your tax returns?

landa7719

No last year was the first time I’ve worked like this. I moved to a different county and got in with a few local companies, they all work the same way. Never encountered it before. I’m thinking of just putting through my take from it all and declaring half of the tax deducted. My mate will do the same and if it’s pulled up, explain the situation and sight that tax has been deducted. I have done my own tax returns for over a decade so I’m versed in it all normally but this is stumping me. Thanks for your input, I appreciate it

comeandgo

Not sure what you mean you have never registered under the CIS scheme.  Is the tax deducted by your main contractor 20% or 30%?  You cannot pay any amount to your mate without you deducting the tax percentage HMRC tell you.  You need to get help from a book keeper or accountant.

whizzywoo

How are you going to declare half of the tax deducted? There is nowhere to put it on your self assessment.

Unless you have the CIS vouchers for the tax deducted you have no way to prove it.  Have the main contractors even paid over to HMRC the tax deducted from you?

There is something very fishy going on here.

landa7719

Yes all the tax deducted from any invoice  for works done is paid to HMRC by the company using my utr number. I get paid the net to my bank and give him half.