CIS LIABLE???

[jimexton]

hi

probably a stupid question but i'm totally confused with the uk tax system and need clarification.

my brother and i have a property development and construction company. we are both employed by the company and are the only shareholders. if the company is awarded contracts for building work (decorating, fitting new bathrooms etc), my brother and i would be the ones doing the work. our company would be invoicing, and being paid by, the customer (private individuals and other businesses). we wouldn't be taking wages for this work- just taking a dividend at the end of the year. are we liable for CIS deductions?
if we do come under the cis scheme, who will deduct the cis 20% tax- the customer or our company?

hope someone can help.

james

[robbob]

Hello jim


You will only need to register for CIS when you start doing work for other companies that are within CIS themselves - I.e companies doing similar type work to yoursleves.
Although once you start trading i would recommend registering anyway as this can easily be done via a call to the CIS helpline and will ensure you do not need to do this in a hurry at a later date.
You will be registering the limited company as a subcontractor within CIS.

Any company within CIS themselves that uses your services will need to deduct 20% from the labour element of the payments made to your company, so it is normal to do a split between labour/materials on any sales invoices done to such customers.Note once your turnover builds up to a sufficient amount you can apply to be paid Gross providing you have a good compliance history with HMRC.

You will only have to make tax deductions if you use subcontractors yourself - as this would make you a contractor. Things get a little more complicated when you employ subcontractors to do work on your behalf, although it sounds like this is not relevant to your situation at present.

If you need any help with Book-keeping,payroll,wages CIS returns etc feel free to contact ourselves.
http://hurrenaccountants.co.uk/

[jimexton]

thanks robbob for clarifying the situation. we have a couple of jobs lined up re-decorating fast food outlets so i assume the cis issue is irrelevant? (customer isn't part of the cis scheme and so would just pay our company as normal).

thanks,
jim

[robbob]

Hello jim

You will have to ask the company you are working for if the work will be within CIS.
Some large companies are classed as deemed contractors due to the amount of construction industry work they undertake even though this may not be their primary activity.

[jimexton]

ok- thanks

jim