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Where Taxpayers and Advisers Meet

Hello very confused

Ben9323
Posts:15
Joined:Thu Jan 18, 2018 9:14 am
Hello very confused

Postby Ben9323 » Thu Jan 18, 2018 9:34 am

I'm thinking of starting up a ltd company to do maintenance works on buildings and install air con boilers etc. I have a normal day job employed as an air con engineer already I have contacts to do electrical work heating etc and alot of friends who cna help.

Now I would be director and shareholder but the company would have no employees. I'd be mainly using sub contractors for my work. Either self employed or other companies.

Now I looked into it and I'd have to register for cis scheme but I don't understand it as some people say I'd have to register as an employer too if I did that but if I'm using sunnies they are hired and not employed and I'd have no paye as any payments would be made via a bank transfer from my company account to there's minus 20 percent cis or 30 if they're not registered or nothing of they're registered for gross

Can I not be an employer and do this or do I need to be registered as one?

How do I find out what cis another company or self employed person should have deducted by me and is it best to find this out before or after getting jobs priced by me/them as it's All a little complex.

If I was myself as director was to pop out and do a maintenance job that was simple would I have to be an employee to do that or could I do it and the company would just be payed directly.

I do not intend to take any salary or dividends as I don't want to affect my current income tax as I'm on 30k without overtime and want to build my little business up and give up the day job.

Any help and advice on all this would be appreciated as there's lots of contradicting info on this stuff.

Do you have to register as a contractor and subcontract if you both give work to people and also take work from other companies etc.

There's lots of issues with all this tax stuff and it makes it very complicated for someone who's aspiring to start a company. Especially when hmrc are the least helpful people when you ring them and are rude.

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Hello very confused

Postby robbob » Thu Jan 18, 2018 10:57 am

Hello Ben

My recommendation would be for you to find a local accountant, very few can do everything themselves when they have a company so finding an accountant who can keep you on the straight and narrow will be invaluable. One who will invest a bit of time at the start and can reel of with confidence what happens with cis is necessary - with paye/cis miltary type planning is necssary due to the short timeframe between month end (5th month) and final reporting and payment dates (about the 19th) in hmrc rules dictate that a contractor can wait till the 19th to give you the information you need to submit that same day - crazy but true.

Its a technical rule of that you need to have a paye scheme if you either receive income with cis with tax deducted or make payments to subcontractors, that then brings in the relevant rules that apply where the scheme exists and there are no payments . Where there are payments or income deducted then this information needs to be submitted to hmrc every month.

The technical rules of how everything works is all available on the hmrc website although i am not joking when i say its ridiculously complicated for what is essentially the same type of transactions that don't specifically need to be reported virtually all other types of business :(

Ben9323
Posts:15
Joined:Thu Jan 18, 2018 9:14 am

Re: Hello very confused

Postby Ben9323 » Thu Jan 18, 2018 11:12 am

But say if I just used sub contractors to start with I technically wouldn't have any employees.
So if I used other ltd companies would I withhold the 20 percent still as I thought this was mainly targeted at self employed people evading tax and not a company.
If it is the case I still withhold the 20 percent for a ltd company doing work on my ltd companies behalf I just do the return by the 19yh of each month yes?

I wouldn't have thought you'd of had to do this for another ltd company as you'd be paying from my business account into there's. And not into a personal account as such.

If I started just with subbing my work out and not doing work for other companies I'd be just a contractor.

It is very confusing to be honest and a little off putting to the newcomer.

Ben9323
Posts:15
Joined:Thu Jan 18, 2018 9:14 am

Re: Hello very confused

Postby Ben9323 » Thu Jan 18, 2018 11:15 am

Do i need paye if I'm not taking a salary and the money stays in company account. As sub contractors would be hired not employed and if they're a ltd company I'd be paying them from my company account into there's.

GlobalTaxAdviser
Posts:633
Joined:Fri Dec 05, 2014 1:18 am

Re: Hello very confused

Postby GlobalTaxAdviser » Thu Jan 18, 2018 1:13 pm

Hi Ben

PAYE registration is simple and takes 5 minutes so wou'dn;t worry about it. Once you have the PAYE then register for CIS

The PAYE registration will be used to pay a salary to yourself to reduce your overall tax

Other limited companies may have a 20% 40% or Gross 0% CIS Status. To make it easier for yourself I would try to register as Gross CIS Status but that depends on other factors

Yes you will have register as a contractor/subcontractor and complete the necessary returns. There are other considerations like offsetting CIS against corporation tax etc

Its a learning curve and you most definitely need someone to help you

Good Luck

GTA

Ben9323
Posts:15
Joined:Thu Jan 18, 2018 9:14 am

Re: Hello very confused

Postby Ben9323 » Thu Jan 18, 2018 1:38 pm

But I won't want a salary as my normal employment already elsewhere is 30k without overtime. The idea is I grow the companies money without salary or dividends etc.

Also if I set up a paye wouldn't that already be deducting tax from the subbies so I wouldn't need to withhold money to do cis return. Or do I pay there company account from mine via the paye minus the tax and then send that off to hmrc with returns.

It is a learning curve and it's putting me off a little everytime I read more. It's not at all the easiest of things and Consteuction seems to have more rules with it

Ben9323
Posts:15
Joined:Thu Jan 18, 2018 9:14 am

Re: Hello very confused

Postby Ben9323 » Thu Jan 18, 2018 1:39 pm

But I have to register for paye and can't just pay subbies via my company account without it?

GlobalTaxAdviser
Posts:633
Joined:Fri Dec 05, 2014 1:18 am

Re: Hello very confused

Postby GlobalTaxAdviser » Thu Jan 18, 2018 3:54 pm

Hi

You need a PAYE scheme and no sure what the issue is getting one.

Secondly, you file a Subcontractors cIS Return, you also file a EPS on CIS suffered as a contractor. The Net you pay over to HMRC

If CIS suffered is greater than the CIS payments withheld for subcontractors then you can offset it against your Corporation Tax Return or request a refund

Yes its a learning curve but hence why an accountant is more important at this stage. Accountants don't just file but can save you tax too

Kind Regards

GTA

Ben9323
Posts:15
Joined:Thu Jan 18, 2018 9:14 am

Re: Hello very confused

Postby Ben9323 » Thu Jan 18, 2018 4:55 pm

But I don't understand the need for a paye system if I'm not employing anyone that's what I don't get. I just want to have a single company bank account and pay sub contractors for the job from it. But I wouldn't be paying myself and won't have any employees.

My thoughts are I register as a company I register for cis I get liability insurance. And an accountant etc.
I get a job the sub contractors come in if I need them I pay them say 1000 plus vat so 1200 i pay 200 to cis return. But I pay them from my company bank account into there's. No paye system.

Also do you have to fill out a cis return for each company you pay or do they all go on one and how long are they.
I've seen the hmrc form you fill out for the subcontractor for there proof I've taken the deductions etc.

So do I really need paye I have no employees and from what I've read I can pay subcontractors in any manner I like longs I deduct cis.

I will be mainly using ltd companies for my work anyway.

GlobalTaxAdviser
Posts:633
Joined:Fri Dec 05, 2014 1:18 am

Re: Hello very confused

Postby GlobalTaxAdviser » Thu Jan 18, 2018 5:29 pm

Hi

You can register as CIS only if paying employees but if you have CIS suffered then you need to register for PAYE too

All the subbies go on one return per month. Remember you need to verify them first too.

Kind Regard
GTA


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