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Where Taxpayers and Advisers Meet

CIS

RMC
Posts:433
Joined:Wed Aug 06, 2008 3:35 pm
CIS

Postby RMC » Mon Nov 16, 2020 10:57 am

A one-man builder secured a substantial contract, received substantial deposit, set up a Ltd company, engaged subcontractors and started work, all at the beginning of November. It was agreed that subcontractors would be paid 2-weekly, and they are now demanding their money.

The problem is that it now takes HMRC 4 weeks to issue UTR (needed for PAYE / CIS registrations), then the company has to register for PAYE followed by CIS, then authorise agent for verifying subcontractors and filing returns, which will probably take another month if not more due to Christmas and the “pandemic”. What should the director do? All workers have worked in the construction industry (deduction 20%). Should he pay them 2-weekly as agreed, verify / report when possible and claim reasonable excuse? Or is there another way?

Anybody has experience with this, please?

robbob
Posts:3067
Joined:Wed Aug 06, 2008 4:01 pm

Re: CIS

Postby robbob » Mon Nov 16, 2020 12:07 pm

Its trickiy here - i would contact the subomtractors helpline and follow their guidance ideally - albeit i may deviate from their if hmrc systems do not allow a business to function as necessary - subcontractors like their cash on friday traditionally speaking/



Practicably speaking probably seeking assurances as approrpiate from subcontractors and paying whatever is deemened appropriate and filing relevant returns and complete verifications at earliest point therafter - obviously if anything other than 70% of labour is paid pending verification it should be clear to subcontractors that those payments could be clawed back. Not exactly a reliable bunch subcontractors when it comes to them confirming whether they are 30%/20% or gross status.

bd6759
Posts:3520
Joined:Sat Feb 01, 2014 3:26 pm

Re: CIS

Postby bd6759 » Mon Nov 16, 2020 12:12 pm

A one-man builder secured a substantial contract, received substantial deposit, set up a Ltd company,
I’d have thought that the one-man builder should be setting up the PAYE/CIS scheme.

wamstax
Posts:1948
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: CIS

Postby wamstax » Mon Nov 16, 2020 8:01 pm

Like Bd6795 I see a potential problem that is whose contract is it anyway? If one man builder received the deposit then presumably it’s his contract and he should have been operating CIS/PAYE if he was already operating in that field.
Need to clarify exactly why all of a sudden we’ve got a last minute complication if it was that big a contract
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

robbob
Posts:3067
Joined:Wed Aug 06, 2008 4:01 pm

Re: CIS

Postby robbob » Mon Nov 16, 2020 8:23 pm

good points warmstax and bd6759 - i simply presumed this one was a given that the business had flipped from sole trader to limited company for this contract and the op was simply worried about the timing aspect only in regard of the new trading entity paperwork - as you both point out - the whose work is it issue should be addressed before anything else.
Practicably speaking i don't really see an issue with an upfornt deposit ahead of the limited company trading as long as its clear to the customer who they are dealing with legally speaking. Even then it could simply be we are now trading as such and such from such and such a date notice - as long as the customer doesnt take the hump in that regard it shouldnt be a problem if its clear work has been performed by limited company.


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