Getting taxed by firm.

[baconbarm]

Im guessing this kind of question has been covered before, but here goes.

Im a self employed welder, my bread and butter is gates n railings to the public. I take payments by cash, cheques or bank transfer- then at the end of the year I pay an accountant to tell me how much I owe in tax........simple.

Once or twice, ive done work for building firms and they tell me to put 'supply only' on my invoices. I know its something to do with construction- but i never took much interest.

Now.. ive priced a job up for a firm who need a lot of welding/fab doing at their factory.

I gave them a price and it was accepted, but after the first week they said they would be deducting tax from my invoice?

Why? I PAY for an accountant to do my taxes.

 

[Fazerruss]

I'm no expert but how can the cheeky sods deduct an amount from an already agreed price?!
My brother has the same set up as you its as simple as if they don't pay the agreed price then the goods are his till paid in full.
And if you're not vat registered then there no tax to deduct from your bill?
Could it be they thought you were vat registered and realised they can't claim the vat back on you're services.

 

[julianthegypsy]

I can't see how. That's like saying I'm only going to pay a portion of your bill then give some to the governnment. How the hell do they know how much tax you have to pay? It's nonsense! Or fraud!

 

[brightspark]

Im guessing this kind of question has been covered before, but here goes.

Im a self employed welder, my bread and butter is gates n railings to the public. I take payments by cash, cheques or bank transfer- then at the end of the year I pay an accountant to tell me how much I owe in tax........simple.

Once or twice, ive done work for building firms and they tell me to put 'supply only' on my invoices. I know its something to do with construction- but i never took much interest.

Now.. ive priced a job up for a firm who need a lot of welding/fab doing at their factory.

I gave them a price and it was accepted, but after the first week they said they would be deducting tax from my invoice?

Why? I PAY for an accountant to do my taxes.

its called cis scheme . i work in the the construction industry for builders they will deduct tax at 20 percent of your bills on labour only not on materials which will be shown seperately . on payment of account and then supply u with a tax deduction certificate. to say u have paid the tax on that job .all is u do is submit it with your accounts at the end of the year and thats it . you pay your tax as soon as u do the job or every month instead of end of year because u are a subcontractor. basicaly the goverment have made the main contractor there tax collector every month

 

[brightspark]

its all here thers nothing sinister about it http://www.hmrc.gov.uk/cis/

 

[Shox Dr]

"Supply only" on your invoice and they will pay you in full, if you put labour then they may well deduct 20% to guard against you not been SE or not declaring it. As they would be liable for any tax due.

 

[ajlelectronics]

I think they are treating you as a CIS subcontractor. I am having the same argument with a company who are adamant that they have to "follow the tax regulations", without thinking about it.

 

[Paul.]

It does sound like they are applying CIS rules to you, Its been some years since I did any work under the CIS scheme but as far as I can remember it only applies to construction work on site, factory work is not included, the best thing to do is ring the CIS helpline, here. http://www.hmrc.gov.uk/cis/

 

[brightspark]

I'm no expert but how can the cheeky sods deduct an amount from an already agreed price?!
My brother has the same set up as you its as simple as if they don't pay the agreed price then the goods are his till paid in full.
And if you're not vat registered then there no tax to deduct from your bill?
Could it be they thought you were vat registered and realised they can't claim the vat back on you're services.

heres what u can earn before u have to be vat registered https://www.gov.uk/vat-registration-thresholds

 

[baconbarm]

It does sound like they are applying CIS rules to you, Its been some years since I did any work under the CIS scheme but as far as I can remember it only applies to construction work on site, factory work is not included, the best thing to do is ring the CIS helpline, here. http://www.hmrc.gov.uk/cis/

This is what confuses me- im a welder, not a brickie.

Im not vat registered either.

I hate this side of being self employed- no matter how good you day is going, something will ALWAYS crop up to spoil it!

 

[brightspark]

This is what confuses me- im a welder, not a brickie.

Im not vat registered either.

I hate this side of being self employed- no matter how good you day is going, something will ALWAYS crop up to spoil it!

im not a brickie or vat registered but im still under construction scheme as paul says ring the tax people up and also ask the firm what the crack is as they will be registered if they work on construction sites even though they have a factory its no big deal

 

[Paul.]

Even under the CIS scheme you can be paid Gross, as long as your record with HMRC is good, tax up to date and tax forms submitted on time, ask the contractor to get a compliance check carried out on you, they will need your UTR to do this, you may have to apply for gross payment status yourself, CIS is quite complicated and if its ongoing work tbh its probably easiest to just go with it, look on it as money in the bank, if you pay too much you'll get it back.
I had a similar issue once when I repaired a gate for a building firm who over interpreted the rules, one call to the tax office was all it took to get my invoice paid in full, that was just one small job though.

 

[Bill Edwards]

It's not something I am familiar with not being involved in construction, but it sounds to me like the other people you have worked for have asked you to put 'supply only' on your invoices so they don't have to deduct tax in this way.

If you were only to put (charge for) the supply of materials, not labor, on the invoices your're issuing to this new customer then there wouldn't be any difficulty.

 

[julianf]

Ask your accountant where the break-even point between being a sole trader and a ltd is. I think its only about 15k?

As a ltd, your accountancy fees are slightly higher, but you never pay more than, about £190 in NI per year, and, after your basic allowance, its 20% (IIRC) corporation tax all the way.

Its sick, but being a ltd avoids a load of tax. Shouldnt be so.

Anyhow, in the above situation, you would just invoice as the ltd, and, i assume, that would negate any CIS stuff.

 

[mike os]

cis is applicable to any labour element of anyone involved in construction... does not matter what for, there are exceptions but pretty much for the big boys (as usual)

materials/ msnufactured off site aand supply only,, ie you don't install would be exempt, but if you fitted or made away from your premises I think the whole labour element is liable

 

[sparkysy]

Hi we deal with cis a lot as electrical contractors, it is useful as at your year end a portion of your tax is already paid off. it is well recognised in the construction industry for sub contractors we do a lot of sub for large construction companies just make sure they really are paying it on your behalf, if they are you will get a cis statement from them with what was paid and when keep them and give them all to your accountant. Hope this helps
Sy

 

[julianf]

it seems if you are set up as a ltd, then you may still be taxed, but this can be claimed back, to allow you to sort out your own companies tax affairs as you see fit -

http://www.hmrc.gov.uk/cis/sub/p35return.htm