Easy CIS question

Easy CIS question

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Ive taken on a new client who is a cis registered bricklayer. Most if his work is cis. He has chosen the financial year end 30th september.

I have therefore drawn up accounts for this period and included them in his 2012-13 tax return. I have then shown the cis tax deducted for the period april 2012 - april 2013 on this tax return.

He is complaining because his previous accountant used to include the cis deductions for the period sept - april?! So claiming 18 months worth.....every year!?!? He has been a sole trader for several years.

In this circumstance would you speak to the previous accountant to understand the situation? Or am I doing something wrong?

Any advice would be greatly appreciated!

SD

Replies (9)

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Euan's picture
By Euan MacLennan
20th Jun 2013 11:36

You are right

The CIS tax already paid in 2012/13 is the deduction allowed against his income tax liability for 2012/13, based on his accounts for the year ended 30 September 2012.

If you want to rattle the previous accountant's cage, you could ask him what he thought he was doing.  It sounds as if he might have been deducting the CIS tax paid in the year to 30 September, rather than 18 months worth.  I am surprised that the discrepancy has not been picked up by HMRC.

Your problem, if it turns out that he has been over-claiming for CIS tax deducted in the past, is how you are going to explain to your new client that he has a substantial tax bill to pay.

Thanks (1)
By ShirleyM
20th Jun 2013 11:41

I agree with Euan

Maybe your new client is mistaken. HMRC would pick up the discrepancy, so he has maybe got the wrong end of the stick regarding CIS tax offset.

Have a chat with the previous accountant and find out what really happened, then you can advise your client accordingly.

Thanks (1)
By petersaxton
20th Jun 2013 11:53

CIS can be nightmare

Most of my CIS clients are great, but ...

I had a new CIS client who used to get a big refund - he had 30% deducted.

He comes to me and in most of the two years he had 20% deducted.

He was complaining why he wasn't getting so much tax back. I point out the reduced deduction.

How can it still be as much? You have to pay NIC on top.

I already pay NIC. That's flat rate but there's the profit related NIC.

I already get NIC deducted. It doesn't mention it on the documents you gave me and there shouldn't be any deducted. He'll show me his payslip.

I chase him and he admits he doesn't have NIC deducted.

He says all the other workers get a lot more than him. That's a new one. Ask one to come in with his tax return and I'll explain the differences. They won't want to give out that information. But they'll tell you how much they get back? It's different.

My view is that the other accountants claim for all sorts of expenses they shouldn't.

I think my new client is now my ex client.

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Replying to Tax Dragon:
Euan's picture
By Euan MacLennan
20th Jun 2013 12:31

And another one to add to Peter's list

petersaxton wrote:

He says all the other workers get a lot more than him. That's a new one. Ask one to come in with his tax return and I'll explain the differences. They won't want to give out that information. But they'll tell you how much they get back? It's different.

My view is that the other accountants claim for all sorts of expenses they shouldn't.

Yes, but did your mate buy a new van in the year?

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By andy.partridge
20th Jun 2013 12:03

Evidence

I think your first priority is to placate the client. Don't allow it to be one accountant's word against the other. Download the proof that you are correct and show him.

Thanks (1)
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By Ned Ludd
20th Jun 2013 12:47

some of the stuff you see

had a guy come in recently who had just got over £5k back on his 2013 retrun.

 

to his credit he knew it was wrong has saved the money and wants it amending.

 

when i looked at the return via his log in some of the entries were:

 

purchases £2600 (clearly £50 per week)

motor expenses £8400

wages £7500 approx

phone admin etc £5600 approx

 

crazy how these things sail thru and yet we get some stuck indefinitely for less than a grand!

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By User deleted
20th Jun 2013 13:04

The worst thing with CIS ...

... is when the contractor takes 90 days to pay, so the subbie is taxed on his Jan - Mar income, but has to wait a year to get the off-set. Ok if trade constant, but if it changes significanty year on year it can create problems - one area where cash accounting would be useful and more equitable!

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blue sheep
By NH
20th Jun 2013 14:19

dont you just love em

another Subby special "my mate's mrs did his tax and he got 5 grand back"

knowing clients as we do I strongly suspect the previous accountant had not made a mistake, and it is the subby with the wrong end of the stick.  Should be fairly easy to check if you have the previous years TR and accounts.

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By godwinsj.hotmail.com
20th Jun 2013 15:00

HMRC

 I once had a client investigated by HMRC and the inspector couldn't understand why the CIS deduction certificates didn't agree with the turnover in the accounts.                                                

Thanks (1)