Hi everyone
I'm looking for advice the HMRC are coming on a tax nic visit and on the letter it said they want to see records on sub contract labour. I am unsure as to what this means can anyone clarify.
Thanks
Fi
Replies (7)
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It means ....
HMRC want to see the records of any subcontractors, eg. people you hire that are not paid as employees via payroll, eg. self employed workers, construction workers, agency staff, etc.
Check your last tax return. Was there a figure in 'subcontractors', under Cost of Sales? If so, those are the records they will want to see.
O dear...
I hope you have your CIS scheme in order, but it looks like not. Time to do some reading, here is a link:
http://www.hmrc.gov.uk/cis/index.htm
This is one of the things where if you get it wrong it is very bad news.
Contact your accountant
May I suggest that you contact your accountant as a matter of urgency.
If you were a client of mine I would want to be involved in any visit from HMRC.
Having said that, what industry are you in ? Some of these letters are standard and parts may not apply to you.
Verification code
Keep hold of your verification code, and have it available for them, to prove you checked the deduction status of the subbies..
Two issues
There are three issues of risk for HMRC and the payer of money to subcontractors.
Are the subcontractors genuinely self-employed?Are the subcontractors activities within the CIS and being reported by the payer on monthly form CIS300?Are the subcontractors declaring their income?
The third point is of interest / risk to HMRC but not to the payer unless the payer is aware that the subcontractor is not declaring the income.