Heads up VAT changes 1st Oct

[fred]

Because construction is full of bent builders who don’t pay tax and/or fold firms for fun. Material costs are high so there is a lot of vat collected but ultimately not passed on (buy all your materials in one quarter and claim all the vat/potentially trigger a rebate, invoice the client and then bump the firm in the next quarter to get all your money plus the gov’s 20% - start all over again the next day).
It’s also why CIS was brought in.
(I reckon most builders are essentially pikies but with older vans!)
GRENADE!!!!

actually CIS and Reverse VAT were brought in not because of the Main Contractor but for bent subbies.

You can avoid CIS completely and get paid 100% if HMRC believe you will pay your tax on time, just apply for it.

Reverse VAT is really a direct benefit to legit subbies to stop them being undercut by bent ones. It makes zero difference to Main Contractor except to reduce the monthly VAT reclaim.

The scam works thus:

subbie A quotes £10k + vat for the job
subbie B quotes £8.5k + vat for the job.

subbie B gets hob, does job and gets paid £10.2k total inc VAT then bumps company keeps vat. Main contractor has already reclaimed the VAT.

result: HMRC robbed, legitimate subby undercut so has to drop rates to get work.

 

[Brendan]

Builders and cash is king Motos don't help but HMRC seem fine with hair and nail salons or by other non construction based companies that are our cash only to just do as they please

 

[Smiffy]

I thought the point of cis was to deal with the subbies that are meant to be employed but don't want to be.
Really the vast majority of the self employed construction industry should be one the books.
Whereas the hairdresser's would hire a chair in a salon and customers are there own. It's not really the case with a self employed labourer

 

[GazCro]

I thought the point of cis was to deal with the subbies that are meant to be employed but don't want to be.
Really the vast majority of the self employed construction industry should be one the books.
Whereas the hairdresser's would hire a chair in a salon and customers are there own. It's not really the case with a self employed labourer

Having self employed subbies rather than employees suits a lot of outfits as well, no pension contributions to pay, no holiday pay, no sick pay, no work see ya.

 

[Smiffy]

Having self employed subbies rather than employees suits a lot of outfits as well, no pension contributions to pay, no holiday pay, no sick pay, no work see ya.

But it doesn't suit HMRC's agenda
Really the alternative to cis is HMRC insist everyone follows the rules that already exist

 

[Jimoz]

My god you can't get out of bed these days without the govt telling you which side. What happened to go work and pay your taxes. First making vat digital, now reverse charge vat.
As for subbies the NI will surely go up massively after they got all these grants.

 

[fred]

But it doesn't suit HMRC's agenda
Really the alternative to cis is HMRC insist everyone follows the rules that already exist

thats why CIS was brought in, subbies didnt pay their tax and spent it all.

 

[GazCro]

But it doesn't suit HMRC's agenda
Really the alternative to cis is HMRC insist everyone follows the rules that already exist

I know it doesn't suit hmrc hence them constantly trying to make it more difficult and more hoops to jump through

 

[Antony Holmes]

we could always go back to the 70s when most construction work was books in dont think that will happen

 

[Jimoz]

First invoice with reverse charge today. Piece of piss. Will be easier really just like when doing new builds vat man will owe me money every quarter. Nice for the boot to be on the other foot

 

[Brendan]

First invoice with reverse charge today. Piece of piss. Will be easier really just like when doing new builds vat man will owe me money every quarter. Nice for the boot to be on the other foot

Except if your supplying a lot of materials you'll have to suck up the deficit till the return. It will probably mean less vat bills but hits cash flow. I had to leave the flat rate scheme as its not worth staying on it