CIS payments

Hudson25

My son did some work with his friend and his friend put one invoice in to cover both their earnings, they are both self employed and the company they did the work for took the tax deducted for the total invoice under the CIS. So my sons share was less tax paid. Now when doing his tax return will he use the same CIS verification number that was given on the statement to his friend as that statement only shows his friends UTR number.

Dazed_and_C0nfused

Did they set themselves up as a partnership for this work?

Hudson25

No they just sent the one invoice in and then his friend paid him less tax, it was the first and only time they have had to do CIS  payments 

[Deleted User]

Hudson25 said:

No they just sent the one invoice in and then his friend paid him less tax, it was the first and only time they have had to do CIS  payments 

Bit of a mess - I think your son’s friend may have to go back to the company and somehow have the payment treated as to two individuals.

Lets say the payment was £1000 for the job with 20% tax deducted. Your son will have received £400 (£500 less 20%). However he will now have to declare £400 and pay further tax of £80 as he has no evidence of tax deducted. Obviously he would prefer evidence that he earned £500 and paid tax of £100.

His friend, however has evidence of £1000 earned with tax deducted of £200. He has to declare this to correspond with the CIS returns. He didn’t end up with £800 though as he had to give your son £400 and will have difficulty claiming this ‘expenditure’. 

As Dazed says, the company paid as a partnership. This needs to be resolved with the company. 

Hudson25

Thank you I thought this would be the case