CIS and Limited Companies

[martinxxxxxx]

I have completed a job for a builder put my limited co invoice as normal and I got this response

We have contacted Inland Revenue to process your payment and they say that we have to give them your company's UTR number due to you working as a subcontractor. Even though you are a limited company, you still fall within the CIS scheme.

You will also have to break your bill down listing material cost (non taxable) and labour cost (taxable at given percentage from Inland Revenue).

If you are not registered with the Inland Revenue/CIS Scheme you will be stopped 30% tax rather than 20% or zero. It would be a good idea if you contact them to make sure that you are registered before we verify your payment.


My accountant says they should just pay the bill - any thoughts

 

[nadger]

To the best of my knowledge what they are saying is correct. As you were employed as a subby they are liable for your tax, UNLESS you can provide them with your UTR, which gives them tax immunity regarding your bill.

From a personal point i think its a bit naughty for them to have not discussed this with you prior to commencement of the work, however that said, they are simply following tax rules laid down by the inland revenue.

 

[Spudnik]

Agree with the above.

You really DONT want to be hit with 30% although i think you can claim it back somehow. not sure.

Just give them the UTR with the breakdown as requested.

Oh, and when you break down the amounts on the invoice, dont forget to "make sure" you get the "correct" material costs in there.

 

[stevey1983]

Yes alot of builders do this, you will be docked 20% on your labour costs and you will then have to claim this back at the end of the year. It gets really nice if you also employed sub-contractors yourself as you would then have to also dock 20% on what you would pay them even though you have already paid tax on the total amount of labour. The CIS scheme is flawed in this way as the tax man gets paid twice and your companies cash flow is effected till the following year when you claim it back.

 

[piz]

Its also important you get a certificate from them to state how much they have stopped you
cos if you dont get it and they go bust your stuffed.
your contractor should issue you a cert every month