Storrsy
Well-known member
What pisses me off is aside from the effect on cash flow. Most of us, I certainly do, have to pay tax on account anyway. So now I'm bank rolling the government twice. Once on tax on account and then now on CIS too.
Giles
Well-known member
To register for gross status you have to show your ‘net turnover’ from construction activities is 30,000 or more (basically profit so materials etc act against this. If your just labour machine only it’s easier than if supplying materials etc full job. Having it at moment subbing to someone the trust are using trying to deduct me 20% on £20k job despite stated labour element.(company is cis utr registered)
and they’ve done the vat reclaim thing as well so no vat charged by me but I’ve paid vat on all my materials. Will sort out next quarter.
my accountant described it like this
You need to show at least 30k a year net turnover being profit after construction costs of materials relating to the same income have been made –
If you went on standard status, then the contractor withholds 20% of the total fee payment (after any materials you pay for directly are deducted), and they pay that to HMRC - you then report the gross income less tax already paid at source and any difference (owing or refundable depending on your final figures) is then calculated through your company. So you get the full tax relief of what you have withheld at the start if that makes sense.
.
On your example figures below how this would work if the company was standard rated is
GB Groundworks (the company) invoices new company A for 20,000
Company A, withholds 20% of this amount (less any material costs you pay that they include on the CIS statement) – so it would be 4,000 tax they would withhold and pay directly (if they supplied the materials).
GB Groundworks the Company - would then pay 5,000 to your lads/subbies, and withhold 20% tax on their pay to those that are standard rated and pay that across directly to HMRC (if they are gross status they are responsible for their own taxes).
On GB Groundworks year end the company would report
Turnover - 20,000
Labour costs – 5,000
Profit = 15,000
Tax due on that would be 19% = 2,850
Tax already suffered at source – 4,000
Refund would be due to the company of the difference = 1,150
Kind regards
Danny
Well-known member
Just go gross, cis is pretty standard practise
30% if your not registered
20% if you are
0 if your gross
vat to vat customers if your not the end-user cant charge vat anymore is a shocker for some people
30% if your not registered
20% if you are
0 if your gross
vat to vat customers if your not the end-user cant charge vat anymore is a shocker for some people
Storrsy
Well-known member
Well I think it's complete bullshit. I've already paid tax on account at 20% for this year. And now on top they're taking another 30% off my labour. So gov currently have 50% off me untill I get it back next year or whenever at which point it's not worth the same money due to inflation.
I'm voluntarily registered for vat but can see myself rapidly de registering and focusing on smaller private jobs if this becomes more commonplace. Absolute c u next Tuesday's.
I'm voluntarily registered for vat but can see myself rapidly de registering and focusing on smaller private jobs if this becomes more commonplace. Absolute c u next Tuesday's.
V8Druid
do it as well as you can,but learn to do it better
they're going to drive a lot of smaller outfits 'underground' / off the radar
.... 's one of the reasons why they're trying so hard to eliminate cash from the economy .... make everything 'visible'
GazCro
Well-known member
And they keep talking about bringing vat threshold down.they're going to drive a lot of smaller outfits 'underground' / off the radar
Storrsy
Well-known member
Although I think in many ways it might easier if everyone had to be vat registered as certainly makes quoting for domestic jobs fairer for the contractors. But perhaps not so great for the end user
Storrsy
Well-known member
Exactly this. Being taxed at source doesn't bother me overly as got to happen at some point. It's the fact I'm being taxed twice untill such a time they feel fit to rebate me. Cash flow is everything for business big or small. The scheme is completely unjust.they're going to drive a lot of smaller outfits 'underground' / off the radar
6
6feetdown
Well-known member
They don't want small companies they want corporations running everythingthey're going to drive a lot of smaller outfits 'underground' / off the radar
6
6feetdown
Well-known member
£99k they had held from me years ago, had the f****ng cheek to ask me to pay some other tax bill due, I told them I had no money as they had it all , their answer different department not our problem
finally got it back at the end of August or early September. Rekon they tried to bankrupt me so they could keep it but being a stubborn b****** I refused to let them. C**** the lot of them
Giles
Well-known member
Cis is different from vat though, if you work within construction industry etc it’ll be required or 30% do as Rory said try class yourself outside of construction
Danny
Well-known member
The cis scheme is nothing new and is something that has been around for years consider yourself lucky that you've dodged it for so long.
Storrsy
Well-known member
I realise vat and cis are seperate.The point I was making though was domestic customers wouldn't be deducting money off me and as I voluntarily registered for vat, in order to make myself more appealing to domestic customers i could always deregister.
Storrsy
Well-known member
Yeah but I think they need to streamline the operation. The "contractor" has to check with HMRC to check status of sub contractor (me) and therefore HMRC should be able to tell that I have already paid a considerable amount of tax on account already and to tax another 30% on top is pure extortion. It wouldnt be a hard thing for them to do.
V8Druid
do it as well as you can,but learn to do it better
can't see as that'd make you more appealing, as you have to add 20% to all your bills to them
V8Druid
do it as well as you can,but learn to do it better
but then they wouldn't have your money for six months or more
Storrsy
Well-known member
Ah sorry I wrote that wrong.imeant in order to make myself more appealing I could always deregister.can't see as that'd make you more appealing, as you have to add 20% to all your bills to them
Storrsy
Well-known member
Exactly. Imagine the consequences if I failed to pay a tax bill for 6 months
V8Druid
do it as well as you can,but learn to do it better
ah right .... yeh that'd make a lot of sense
...... they can't claim material's VAT, so having the additional 20% on labour, as well, leaves you disadvantaged, over a non reg. competitor
Danny
Well-known member
The best thing you could do now is register for the scheme so if this happens again you'll only have 20% taken off you.
Unless you meet the criteria for gross payment status.
This is the joys of the 80s & 90's construction boom where people didn't pay taxes etc.
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