I have a client who is self employed, he is paid less CIS tax and has sub contractors working for him who he stops CIS tax from.
I've submitted an EPS to HMRC to show the CIS he has been stopped and submitted the monthly CIS returns showing what he has stopped from his sub contracotrs.
But when it comes to his tax return, i know i can put the total CIS he has been stopped on there, but what about the CIS he has stopped from his sub contractors?
Do i either just put the difference between the two on his return, or do i put the full amount then he pays HMRC for what he has stopped from his subbies?
Thanks
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Is this person a limited company or sole trader as you refer to an EPS Return which would only be for limited companies to reclaim CIS tax deducted but then mention "his tax return" which reads as self-assessment
Did HMRC actually advise you to do that? Usually the EPS is for limited company contractors only
Not out of the woods yet
This is bizarre, as i have access to his HMRC log in and there are no penalties and the EPS has worked perfectly :o)! Just need to get the dosh back now!
I think this may be because HMRC's system isn't intelligent enough to differentiate between limited and non-limited employers and would accept an EPS with CIS deducted regardless.
So the CIS needs claiming on the self assessment return then amended EPS's submitting showing no CIS claim
Confirmation here only limited companies can submit the EPS
https://www.gov.uk/hmrc-internal-manuals/compliance-operational-guidance/cog909235
I concur
I have to agree with others on this thread. Had a similar situation for a partnership. HMRC confirmed they only have the facility to offset in year CIS for Ltd Co via EPS.
Ooops !
Agree - only companies can set this tax off against their PAYE payments.
It's a major driver towards incorporation.
As for the self-employment pages the entries should be the gross subcontractor payments as the expense and then claim the CIS suffered.
The CIS tax deducted from the subcontractors should have been paid to HMRC during the tax year, quarterly or monthly accordingly
Apply
Get your client to apply for gross payment status. Cheaper than incorporating, and he won't have to learn that he can't dip into the bank account at 5pm every Friday night!
The client will now need to pay across to his PAYE account the amount of CIS tax deducted from the subcontractors during the year
Hi
Just reading this post and wondered is this still the same? I have a self employed client who has recently started subcontracting others for larger jobs.
As I'm reading this is it correct that he suffers the deductions from the company and then he needs to deduct CIS from his subcontractors and pay this over to HMRC. Only later on his self assessment tax return can he offset the two?
Hi
Just reading this post and wondered is this still the same? I have a self employed client who has recently started subcontracting others for larger jobs.
As I'm reading this is it correct that he suffers the deductions from the company and then he needs to deduct CIS from his subcontractors and pay this over to HMRC. Only later on his self assessment tax return can he offset the two?
First bit's right. Second bit isn't. He can't offset one against the other, he can only claim a deduction from profits for the tax he pays on behalf of his subcontractors.
Does he fancy being a company director ?
Thank you for the quick response.
After further research, that's the conclusion we came to.
So am now in the process of setting up a limited company for him.
Cheers
Thank you for the quick response.
After further research, that's the conclusion we came to.
So am now in the process of setting up a limited company for him.
Cheers
A company isn't necessarily the right answer.
But it does help with cash flow.
True and we looked into that, but he hasn't got 12 months history behind him yet to prove the £30k, and wants it sorted sooner rather than later.
True and we looked into that, but he hasn't got 12 months history behind him yet to prove the £30k, and wants it sorted sooner rather than later.
Ooooof - hope corporate status works for him otherwise it could be short term gain, long term pain.