Plant Hire Tax deduction

[Safc1984]

Hi. Looking for any advice which would be greatly appreciated.
I own a small civil engineering company which works as a sub contract labour only company to a larger contractor.
I have recently purchased my first excavator which is been hired to the large contractor.
I am CIS registered and the contractor is deducting 20% CIS from the hire cost of my excavator. Is there anyway around not paying CIS on my excavator?
Thanks

 

[groundworker]

Deduction is only on labour element, your invoice should separate out labour and plant hire so there is no deduction on plant.

Alternatively go for gross status and no deduction on anything.

It's not up to the contractor to decide which deductions to make.

 

[hiluxman]

Deduction is only on labour element, your invoice should separate out labour and plant hire so there is no deduction on plant.

Alternatively go for gross status and no deduction on anything.

It's not up to the contractor to decide which deductions to make.

I seem to think if you own the plant it's still stopped as 20% if it's plant you've hired in it's then zero rate and billed separately.

If they are new to it all or below the threshold then they won't be able to get gross status.

 

[groundworker]

I seem to think if you own the plant it's still stopped as 20% if it's plant you've hired in it's then zero rate and billed separately.

If they are new to it all or below the threshold then they won't be able to get gross status.

Hmm maybe, not heard of that! I've always kept it separate and not had any issues, maybe my customers are less fussy about it.

I agree about gross, brilliant when you can get it though.

 

[hiluxman]

Hmm maybe, not heard of that! I've always kept it separate and not had any issues, maybe my customers are less fussy about it.

I agree about gross, brilliant when you can get it though.

Or when they say just bill me all as self drive

I've not done any cis work for that long I'm now not on the system, so if I did I'd have to re register then re apply for gross....somthing I hope I won't have to do anytime soon.

 

[JD450A]

You need to go Gross CIS you then become responsible for your whole tax payment yourself so only do this if you have an actual accountant that knows what they are doing.

 

[doobin]

You need to go Gross CIS you then become responsible for your whole tax payment yourself so only do this if you have an actual accountant that knows what they are doing.

And a good track record with HMRC….

 

[groundworker]

Currently having a mare with CIS, HMRC have been on to my accountant requesting verification of deductions against my invoices as it doesn't match their system.

Went back to a couple of customers and they confirmed they made mistakes, issued new CIS statements to prove the tax was deducted.

Two other contractors have been unresponsive over email/phone for weeks, my accountant has said if I don't have the statements over by end of week then HMRC will essentially consider that tax unpaid and I'll have to pay it again

Sooner you can go gross the better!

 

[JD450A]

And a good track record with HMRC….

To be fair you can go Gross CIS with next to no track record.... But you do need a competent accountant to do so.

Too many people piss about with either no accountant, or a accountant they use once a year..... Do not get me started on "book keepers"

Something that is also a immediate red flag for me are accounts that work on a percentage of turnover..... I'm not sure where the practice emanated from but if they don't have an hourly rate and instead think they are entitled to a percentage of your annual turnover they can get f***ed...... It is easier to keep the records of a million pound turnover company who's transactions are 100, £10,000 transactions than Dave who turns over £100,000 and has got a 3.99 invoice for some screws he wants you to account for.

 

[JD450A]

Currently having a mare with CIS, HMRC have been on to my accountant requesting verification of deductions against my invoices as it doesn't match their system.

Went back to a couple of customers and they confirmed they made mistakes, issued new CIS statements to prove the tax was deducted.

Two other contractors have been unresponsive over email/phone for weeks, my accountant has said if I don't have the statements over by end of week then HMRC will essentially consider that tax unpaid and I'll have to pay it again

Sooner you can go gross the better!

Your accountant wants to be chasing HMRC that it is the main contractors duty to hold back CIS and not in fact yours.

 

[groundworker]

Your accountant wants to be chasing HMRC that it is the main contractors duty to hold back CIS and not in fact yours.

I agree and have put this to her, what a backwards situation to for it to be up to me, already provided invoices and bank statements that show I received a net payment

 

[JD450A]

I agree and have put this to her, what a backwards situation to for it to be up to me, already provided invoices and bank statements that show I received a net payment

Trouble is HMRC will bully.... Same as with the E.A and DVSA. Despite the fact it's quite clear who's responsibility CIS collection falls to if your to be deducted

 

[Brendan]

Own plant is treated as labour under cis.

You can go gross status once your net is over 30k and have a decent history of paying taxes on time.

It's not the right thing to do but I just send them a single cost and tell them to deduct the full 20% cis off the gross bill evening when supplying materials and other labour. It tends to balance out between cis work and domestic plus have ended up with a decent rebate a few times rather than something like a 30k bill

 

[DaveDCB]

Been cis from day 1, firstly as a subby, always split labour and plant no problem . Now we run our own cis for about 10 lads, software does it all , no excuses for employer to get it wrong imo!

 

[6feetdown]

I seem to think if you own the plant it's still stopped as 20% if it's plant you've hired in it's then zero rate and billed separately.

If they are new to it all or below the threshold then they won't be able to get gross status.

Yeah pretty sure this nowadays

 

[DaveDCB]

CISR14260 - The Scheme: construction operations: plant hire - HMRC internal manual - GOV.UK

www.gov.uk

Well that’s one way how to bash the owner operator into submission!

 

[Brendan]

CISR14260 - The Scheme: construction operations: plant hire - HMRC internal manual - GOV.UK

www.gov.uk

Well that’s one way how to bash the owner operator into submission!

Been like that for a while, generally if it's owned plant it's treated as labour but fuel is treated as materials.
Not sure as a sole trader if it would be legal to set your self up as two different businesses then hire the kit from your other sole trader business, no different to groundwork companies having a subby business and a separate plant business

 

[DaveDCB]

Been out of that game for 10years now, so it didn’t affect me back then as an owner op. We don’t employ anyone with materials as all our lads are labour only or gross, nice and straight forward.

 

[V8Druid]

HMRC raised £15bn in six months, construction in firing line

The taxman is targeting construction firms over the employment status of CIS subbies and consultants.

www.theconstructionindex.co.uk

" The taxman is targeting construction firms over the employment status of CIS subbies and consultants ..... HMRC raised £15bn in six months, construction in firing line "

 

[Storrsy]

I despise CIS. To the point I have to be pretty keen to do the job to want to work for anyone that deducts. Already paying tax on account before I'v even earn it let alone have CIS deducted on top.