CIS (Construction Industry Scheme) Rules - Help! Please Explain

Malibu83

So my husband is new to self employment as a sole trader in the construction industry.  He is registered as self employed and has joined CIS.  He has been doing work as a subcontractor and the contractor has paid him regular wages but since he started (in November) he has never received a pay slip or similar - he just has bank statements as proof of wages.  He also hasn't been invoicing the contractor which he should've been doing.  He is in the process of doing his tax return and he has asked the contractor for proof that his taxes have been paid (for piece of mind) but every time he asks, the contractor says he'll get back to him.  From what I've read online, the contractor should provide monthly CIS statements - is this correct?

I also have another query.  My husband has also been doing his own private construction work and invoicing clients.  On his invoices he also includes the wages of another sole trader which also works with him.  The other guy then invoices my husband and then he pays his gross wage amount.  Is this the correct procedure?  From what I read online this is wrong and he could be fined - should the other sole trader either invoice the client directly or my husband pays his net wage amount and deduct his tax through CIS?  I also found out that this guy hasn't even registered as self employed which really annoyed me.

Today, my husband phoned HMRC to clarify the above and they said the contractor doesn't have to pay subcontractor taxes owed monthly so they have until the end of year deadline to pay.  They also said how my husband is invoicing is fine.  This goes against what I've read and I'm worried that it's wrong information so I need further clarification.

Marcon

Malibu83 said:

So my husband is new to self employment as a sole trader in the construction industry.  He is registered as self employed and has joined CIS.  He has been doing work as a subcontractor and the contractor has paid him regular wages but since he started (in November) he has never received a pay slip or similar - he just has bank statements as proof of wages.  He also hasn't been invoicing the contractor which he should've been doing.  He is in the process of doing his tax return and he has asked the contractor for proof that his taxes have been paid (for piece of mind) but every time he asks, the contractor says he'll get back to him.  From what I've read online, the contractor should provide monthly CIS statements - is this correct?

I also have another query.  My husband has also been doing his own private construction work and invoicing clients.  On his invoices he also includes the wages of another sole trader which also works with him.  The other guy then invoices my husband and then he pays his gross wage amount.  Is this the correct procedure?  From what I read online this is wrong and he could be fined - should the other sole trader either invoice the client directly or my husband pays his net wage amount and deduct his tax through CIS?  I also found out that this guy hasn't even registered as self employed which really annoyed me.

Today, my husband phoned HMRC to clarify the above and they said the contractor doesn't have to pay subcontractor taxes owed monthly so they have until the end of year deadline to pay.  They also said how my husband is invoicing is fine.  This goes against what I've read and I'm worried that it's wrong information so I need further clarification.

It would be sensible to get an accountant to check the processes and procedures before your husband goes any further. Paying to get things right from the outset (or nearly the outset!) is far cheaper than paying to put things right at a later date. 

Does your husband have proper written terms of business in place with the various parties with whom he is dealing - and the necessary insurances? An accountant should be able to check that, too. Again, it could be a huge cost saving should anything go amiss at a later date.

This link might be helpful reading, but proper professional advice is still likely to be a good idea: https://taxaid.org.uk/?s=cis