I have a husband and wife building partnership, who would like to enter into a building contract with the partnership to build their own new build house. They would be using this as any other job, billing for time of the partner and staff, together with materials at zero rate, is this possible?
My initial thought is that they can’t, however I haven’t come across a situation before where the client is willing to pay the income tax on his own labour to build his own house!
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You need to ask the clients ''why'' they want to self build using the approach you have outlined.
I think you will soon identify a knowledge gap or misapprehension.
I think they want to obtain trade discounts and the skills of their work force to ensure a well executed job.
National insurance on staff costs is another tax !
also possibly 9% class 4, and even 9% student loan tax .
That alone could pay for a pair of gold plated taps at chez nous.
They have then applied a quantum leap , which ends up with you raising a query on this forum.
Back to the drawing board and get the full picture is your first step.
Quick thoughts.
client out sources the contract.
the workers form ….outsource limited
Cash flow inside outsource limited , would be good .
no monthly PAYE due .
in reality it is client who enjoys the cash flow gain
C Tax 9 months after year end...…….. say contract takes up 12 months!!
Workers take life style /'' salary'' as dividend..... equates to Self employed tax and 9 %NIC …… well not far off.
Client holds a major retention on the work invoiced ( effectively the Ctax is the retention ) released when outsource limited CT is due .
effectively the CTax would have been the PAYE, payable monthly, without the 12% and 13.8 % NIC.
as always how much is involved ££££.?
So turning the partner's personal efforts on work on his/her own house into taxable income?They would be using this as any other job, billing for time of the partner ......
Does the client have the money to support the work when it appears that the partnership has no work & therefore the income has declined ?