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CIS Deductions

CIS Deductions

Hi There

I've just started working for a Company that uses subcontractors.  This company has never deducted CIS as the engineers used were primarily air conditioning engineers.  Yet now we are also going to be using Electrical Subcontractors.

We don't really want to go down the CIS route and I've noticed on the HMRC website that if its less than £1 million spent on construction works then there would be no need to deduct CIS from the subcontractors.  Am I understanding this correctly that as our company's turnover is around £650k per year and that is for both air conditioning works and electrical works we would not have to make any deductions?

I've also being told by someone already in the industry that if our subcontractors become a limited company and I work for them as a book-keeper and do all the accounting works for them that this would be another way of not having to deduct anything.

Can anyone assist me as I want to make sure that what my MD wants to do is correct and that there will be no comeback from the HMRC as I know how strict they are when it comes to CIS.

Any advice will be grately appreciated.

Regards

Ali

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07th Mar 2012 12:18

Speak to an accountant

If the work the company does falls within the scope of CIS they will have to be registered as both a contractor ( for payments to subcontractors) and a subcontractor for (receipts from customers) under CIS.

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By aholt
07th Mar 2012 12:28

Hi There

Thank you for the above, thats what i'm trying to ascertain, as looking on the HMRC website its says if turnover is less than £1million, then no need to register, but need to make sure that is the case before I report back to my MD.......

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07th Mar 2012 12:30

Not understanding correctly

You seriously need to look more closely at the rules and regulations covering CIS. The information you are being given sounds like "pub speak" from people who don't know what they are talking about. If you try to follow their advice, you could end up in a big (expensive) mess.

With a £650K turnover you must be using a firm of accountants - at least I hope so. Start by asking them.

 

John Perry

www.centralbusiness.co.uk

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By SteveOH
07th Mar 2012 12:58

Contractors and deemed contractors

If your company is a contractor in the construction industry then it must operate the CIS scheme.

If your company is not in the construction industry but spends more than £1 million average per year, over 3 years, on construction work then it must also operate the CIS scheme; as a deemed contractor.

This is where the £1 million comes in. However, as the previous posters have said, this is an extremely important area to get right; so speak to your company accountants.

PS Saying that "we don't really want to go down the CIS route" is a bit like saying "we have 20 employees but don't really want to go down the Paye route"  (Said with tongue firmly in cheek)

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07th Mar 2012 13:13

You might want to take a look at

http://www.hmrc.gov.uk/manuals/cisrmanual/CISR14090.htm

which covers air conditioning.

 

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By aholt
07th Mar 2012 13:34

Thanks for your info guys, as I thought this is far too complex for me to try and deal with without professional help - to the accountants I go :o)

 

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