CIS Contractor companies

CIS Contractor companies

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There appears to be few companies on the market (loosely called 'Contractor Companies') who seem to offer CIS solutions to other Subcontractor companies. The way it operates is that the ultimate subcontractors are taken on a Self-employed contract by such companies. They in turn then supply them to another Subcontractor company in the construction industry and charge a flat fee of approx £15-£18 per man per week. The 'Contractor Company' does all the compliance - verification of subees, CIS monthly returns to the HMRC, payment of the CIS tax and takes all the responsibilities if there is a challange to the self-employed status of the ultimate subcontractors. The subcontractor company to whom it supplies the labour will obviously have to account for CIS tax and operate the CIS scheme for the 'Contractor Company'. Therefore on the CIS return of the subcontractor company, there will only be one subcontractor - the 'Contractor Company'.

This appears to be a good solution for small subcontractor companies. Has anyone got CIS clients who use the services of such 'Contractor Companies' and does it work? Are there any pitfalls to watch out for the use of such companies by clients? I am sure there have been threads on accountingweb previously on this matter but any recent experiences of members especially under the New CIS would be very useful.

Thanks for all the help
Gandalf the Grey

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