Property Letting Agents

Property Letting Agents

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HI,

If Business A does 'construction work' for a property letting business is Business A a subcontractor? I asked HMRC twice today to be told yes, unless the actual work wasn't covered by CIS, but having just trawled the internet for an hour, found that Property Investment businesses are outwith the scope unless they spend more than £ 1m on Construction works.

As soon as Business A then contracts Business Z to actually do the work I am clear that that is CIS.

Any help would be appreciated as I have just made a third call to HMRC for guidance but await their call tomorrow.

Thanks

Lorraine

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By ShirleyM
13th Sep 2011 21:11

My understanding is that ...

Most property letting agents hire subbies on behalf of the house owner, so it does not come under CIS. Are they getting deductions of CIS tax?

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By tladirect
14th Sep 2011 08:36

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Lorraine,

You may wish to consider the following:

1) "Letting agents" tend to use "approved contractors" - that is - tradesmen they can rely on to turn up and sort out problems.  These tradesmen invoice the letting agent and appear to be self employed businesses in the normal sense;

2) Many landlords (ie investors/investment businesses) also use the same sort of tradesmen on the same basis even when a refurbishment can be materially significant (ie they may appear to be property developers). Such investors may use letting agents but often let their own properties, operating as "letting agents" in their own right;

3) There is another "class" - builders who invest in property which they refurbish and then let. These are often fairly sizeable/BIG investors/operators. The conspicuous feature is that - their "tradesmen" appear to be tied to them/work almost exclusively for the investor - which is not surprising because this type of investor is fundamentally a builder.

There are many variations/permutations but the point is that all the above may hold themselves out to be "letting agents/businesses" but it is clear that their relationship with their tradesmen differs insofar as in the case of 1) and 2) CIS does not appear to be an issue whereas in 3) it probably is.

Apologies if you are already aware of all this but I thought I would mention it in case it helps to clarify the issue.

Good luck.

tladirect

 

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