CIS... surely?

CIS... surely?

Didn't find your answer?

Hopefully, this is a ridiculous question, and I am being stupid...  I am sure that this falls within the Construction Industry Scheme...

I received a quote for having a bathroom fitted at home.  Company providing the quote is a kitchen/bathroom fitter with a big shiny showroom. 

If i am honest, I didn't look in huge detail at the quote, just the bottom line payable.  Quote was acceptable, so work has started, and is pretty much completed.

I have made a couple of 'payments on account' to the company as work has progressed.

We now come to the stage when final payments are due (although i have not yet seen an invoice), and;

  • I have been asked to pay the workforce directly..
  • In the original quote, VAT was charged on materials etc, but not on labour

When querying why I was paying the workforce directly, I have been told this is standard practice as the fitters are not employees and are all self employed.  Hence why the company does not pay them directly, nor charge VAT on their labour

Either I am going mad (it has been a long day), or;

  • CIS should apply, with the company paying the workers via deduction of tax, or gross if a subby certificate is held.  Or, they may be employees (certainly one of the fitters told me over a cup of tea that he has worked for this company for a couple of years, works only for them, and they ring him in the morning to tell him where to go that day), in which case PAYE should be operated.
  • Also, on the same basis, VAT should be chargeable on the labour.

Am I going mad, of is the fitting company taking the mick?

Thanks

Mark

Replies (5)

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By Paula Sparrow
09th Jul 2012 15:08

It has been standard practice

for bathrooms/kitchens/windows for a long time for the customer to pay the fitter direct to avoid CIS, employment and VAT issues

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By andy.partridge
09th Jul 2012 15:37

Carpets too

The deceit is, perhaps, you not being advised of this arrangement before you agreed the quote.

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By Roland195
09th Jul 2012 15:49

If you are offended by the tax avoidance involved

Then refuse to pay for the labour and see what happens. As a matter of law, you have not contracted with the fitters, the company did. In this case only they can sue for payment which would pretty much expose the set-up as a VAT avoidance scheme.

  

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By Moonbeam
09th Jul 2012 16:51

I had this with doubleglazing company

The person who did my doubleglazing contracted verbally to do the work and refused to give a paper quotation. The friend who recommended him said he would do a good job and was kosher. I thought he was 10 times better than most other double glazers I had met so went ahead.

The work was done to a very high standard.

He then gave me an invoice from the company supplying the windows, directly addressed to me and asked me for the balance plus an extra £30. He wanted this paid in 3 parts, 2 parts of which were to his fitters.

At that point I exploded. I was very unhappy about the invoice from the window company, as I knew very well that any problems I had with the windows would required me to go to court to get anything done about it - such is the double glazing industry. I knew there wasn't much I could do with 3 strapping men in my house, so gave in on this one. I did however state that I wasn't going to pay anything else unless there was one other invoice from the man I had contracted with. I had not contracted with the fitters individually - just with him. I told him he would have the money in his account asap if he emailed me his invoice pronto. I was unhappy with having to pay the extra £30, as that was not what he had quoted for but would do so just to get the deal completed. I complained bitterly about the whole set up, but almost certainly wasted my breath.

He sent me an invoice for the balance that evening and I paid it immediately. The whole set up was clearly a VAT/Tax avoidance device.

I have dealt with lots of doubleglazing merchants who have correctly invoiced me, but used cowboys to do the work. I would rather have good work, but find it very difficult to accept that other people are allowed to avoid tax but I am not. As a householder goodness knows where you draw the line.

Why aren't HMRC checking into these trades much more effectively? Even with extra staff in the past they haven't done much.

 

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By bruhart
20th Dec 2012 21:29

You are correct CIS applies

You are correct. CIS should apply - the contractor is sub contracting work, therefore deductions should be taken, how much will depend on the registration status of the subcontractor. 

Make sure you avoid paying by cash (that way there is a financial trace/audit) and that invoices/receipts are obtained from all parties in receipt of payments on your part. 

Bruce
www.brucehartle.co.uk

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