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CIS gross status

CIS gross status

I have a client who is a subcontractor CIS tax deducted. He has taken on other subcontractors and we have submitted CIS monthly returns since July last year. He has been registered for VAT for 18 months. All returns up to date. He wants to apply for gross status. I want him to become a Limited company as his turnover is in excess of £80,000 and his profit £30,000 and rising. He wants his brother to become a director as well.

Question is... a Limited company is a separate person, I know - if I create a company as from the end of this month can I apply for gross status immediately or should I wait until July when the 12 months has passed for him personally and then set up the Limited company. The company wont make the £200K limit.

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12th Mar 2012 16:30

The directors

can be significant - HMRC have been know to allow gross payment immediately where a sole trader incorporates to a single-director business; ie where the same business is continuing as a different entity. However if you are bringing in another director you are doubling the turnover threshold as well as introducing an unknown quantity from HMRC perspective, so you might need to wait until the increased threshold is reached.

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By EOAKS
miketombs
12th Mar 2012 17:00

Sorry to ask for further help..

Would it matter that the 2nd director is also a CIS would you think? Or shall I just go down the single director route, ask for gross status and wait until the increased turnover has reached before bringing in the 2nd director? That would be possible.

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