Self Employed CIS Contractor

Self Employed CIS Contractor

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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

Replies (25)

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By cstwragby
14th Apr 2016 17:09

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

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By Jonrich
14th Apr 2016 17:20

No this is for a sole trader, i had to submit an EPS as otherwise HMRC would expect him to pay over the CIS he stopped from his subbies when he had been stopped more.

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By cstwragby
14th Apr 2016 17:24

Did HMRC actually advise you to do that? Usually the EPS is for limited company contractors only

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By craig preece
14th Apr 2016 17:27

I thought

you could only claim CIS suffered via EPS for Ltd Co?

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By cstwragby
14th Apr 2016 17:29

I am thinking this client is going to end up with late CIS payment penalties

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Replying to ketteringUK:
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By Jonrich
15th Apr 2016 10:49

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!

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Replying to Paul Crowley:
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By cstwragby
15th Apr 2016 11:13

Not out of the woods yet

Jonrich wrote:

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

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By cstwragby
14th Apr 2016 17:36

Confirmation here only limited companies can submit the EPS

https://www.gov.uk/hmrc-internal-manuals/compliance-operational-guidance/cog909235

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By stratty
14th Apr 2016 17:41

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.

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RLI
By lionofludesch
14th Apr 2016 17:43

Ooops !

Agree - only companies can set this tax off against their PAYE payments.

It's a major driver towards incorporation.

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By cstwragby
14th Apr 2016 17:54

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

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By cheekychappy
18th Apr 2016 12:30

.

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Replying to Paul Crowley:
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By Jonrich
15th Apr 2016 10:58

Useful as always ;o)

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By claudialowe
15th Apr 2016 11:18

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!

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By claudialowe
15th Apr 2016 11:21

Oh.....

and check your PI insurance as well :-(

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By Jonrich
15th Apr 2016 11:22

I've just spoke to HMRC employer helpline who couldnt help, she was adamant that its self assessment.  When i explained to him he said that i have been put through to the wrong place! Brilliant! I've done an EPS now showing zero CIS suffered.

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By cstwragby
15th Apr 2016 12:22

The client will now need to pay across to his PAYE account the amount of CIS tax deducted from the subcontractors during the year

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By nomadtime
08th Jul 2023 17:56

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?

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Replying to nomadtime:
RLI
By lionofludesch
09th Jul 2023 18:42

nomadtime wrote:

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 ?

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Replying to lionofludesch:
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By nomadtime
09th Jul 2023 18:56

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

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Replying to nomadtime:
RLI
By lionofludesch
10th Jul 2023 19:08

nomadtime wrote:

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.

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By claudialowe
11th Jul 2023 09:06

Gross status - easier and cheaper than incorporation!

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Replying to claudialowe:
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By nomadtime
11th Jul 2023 09:19

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.

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Replying to nomadtime:
RLI
By lionofludesch
12th Jul 2023 11:33

nomadtime wrote:

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.

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Replying to lionofludesch:
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By nomadtime
12th Jul 2023 12:09

Yeah, we've gone through the pros and cons and reckon he'll be alright.

Thanks

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