Share this content

CIS deductions in a construction industry chain

How to deal with CIS if you are both contractor and subcontractor

Didn't find your answer?

Lookig for some help please with how to deal with CIS if both contractor and subcontractor. 

I work for a builder who is 20% cis deduction  and he has a contract working for a main contractor on a developement. My builder has a plumber who he is using on this job but plumber has CIS Gross status.

If for example the plumber invoices for £1000 labour - he will get paid the full £1000.(as gross status)

When my builder invoices the main contractor for the services of the plumber and adds a 10% markup, he  invoices for £1100 - however he will only get paid £880.(has 20% cis deduction) - therefore a shortfall of £120 to pay the plumber.  Is this the correct treatment? How do you deal with the shortfall??

Replies (8)

Please login or register to join the discussion.

avatar
By Sandnickel
27th May 2022 18:53

Increase the price? Apply for gross status? Offset CIS suffered against PAYE if you are operating as a ltd.

You are always going to pay £1000 to the plumber regardless of whether he is gross status or not. CIS is just a cashflow headache so needs to be budgeted for / priced appropriately.

Thanks (1)
Replying to Sandnickel:
avatar
By Buttons
27th May 2022 19:08

Thank you for your quick response.

Thanks (0)
RLI
By lionofludesch
27th May 2022 20:08

Agree. It's just a cash flow thing that has to be managed.

It's managed more easily as a company but you didn't ought to be deciding to be a company on that single criterion.

Thanks (0)
Replying to lionofludesch:
avatar
By MCV71
27th May 2022 22:20

I came across a payroll-only business the other week that for the last few years has been entering CIS deductions off a sole trader on a payroll EPS to offset against subbie tax he himself has deducted off others! She reckons HMRC have always processed it. I don't see how but she wasn't having any of it.
Unless HMRCs own systems can't differentiate?!

Thanks (1)
Replying to MCV71:
avatar
By Paul Crowley
27th May 2022 22:59

None of us would try because we know it is not allowed.
Do HMRC actually have a reconciliation process? I thought yes because on one particular client they regularly challenge the year end refund claim

Thanks (0)
Replying to MCV71:
avatar
By DKB-Sheffield
27th May 2022 23:32

I haven't seen this exact case, but I did take on a sole trader in the past who had...

1. Offset CIS suffered against the employer's PAYE/NIC liability (which was accepted on the PAYE account).

AND...

2. Claimed the deduction on their SATR (no HMRC amendment).

All corrected eventually (only around £4K in total) BUT the previous adviser had been quite happy to let it ride for a few years. When I asked the former accountant he said... quote/ unquote... "I didn't advise on PAYE, and I did nothing wrong when I entered the claim on the SATR".

Thanks (1)
Replying to DKB-Sheffield:
avatar
By Paul Crowley
28th May 2022 04:47

On reading it I had considered that possibility, but assumed the offset would be deducted from the claim on the tax return.
Prior agent a bit sloppy in logic checking of wages
I would be mortified if that passed me by even if an employee did the accounts

Much appreciated

Thanks (1)
Replying to Paul Crowley:
By Moonbeam
28th May 2022 08:18

There are so many truly dreadful firms out there calling themselves "accountants" that anything is possible

Thanks (2)
Share this content