CIS pricng query

CIS pricng query

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I've recently taken on a client who intends to register as a contractor under the CIS scheme. They have asked me to administer/submit their monthly CIS returns (although I offered to show them how to complete said form on their own behalf), but I don't know what an appropriate charge is for this type of basic administration.

I was thinking of charging rather a nominal sum of, say, £10 per subcontractor per month, but don't have any point of reference to base this on. Is this a reasonable figure?

Thanks in advance for any advice.

Replies (10)

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By GrowthAccountant
01st Sep 2012 21:44

Does the client?
The bottom line is, does the client think it is reasonable, and....are you happy to do the work for that rate? No other point of reference required! If the client is happy to pay that and you are happy to do it at that then everyone is happy.

Whether you could have (or wanted to) charged more is another question.

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Chris M
By mr. mischief
02nd Sep 2012 08:15

Have you done this before?

The reason I ask is that it very often can be a whole lot worse than PAYE, and there are penalties of £100 per month for late returns.  These can quickly build up to thousands.

Not only that, I once had a client call me with a £200 penalty notice.  I said I was confident we'd submitted on time and indeed this was the case.  I rang credit control who told me I had a £200 penalty, no submission made per her screen.  As it happens I was using the other line to call Newry CIS and at almost the same moment she confirmed we'd submitted on time.

To recap, 2 people in different parts on HMRC looking at the same tax record and showing 2 totally different results.

I advise you to charge low fees only if you REALLY know this client, and emphasise "No UTR, no payment to subbie."  Things I have had:

1.  Clients paying guys with no UTR who had left the job by the time we were doing returns.

2.  Clients paying a guy on someone else's UTR number because the subbie did not have a UTR.

3.  Clients who either did not know the CIS rules or pretending they didn't paying guys gross on the basis that they were not "real" sub-contractors.

This sector is full of cowboys, that is why it has its own draconian little tax scheme all of its own.  HMRC view the sector with utter contempt and are even slower, even more jobsworthy in their approach to CIS than other sectors.  Yes sadly this is possible!

So tread carefully, know your client, and specify exactly what you are doing for the fee.

 

 

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Replying to I'msorryIhaven'taclue:
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By DMC151
02nd Sep 2012 12:10

Thanks for pointing out the potential perils of working with CIS300 submissions.

I've a lot of experince working with CIS contractors and subcontractors but have always avoided the monthly returns administration for the reasons you've cited. I also agree with you on the inefficiencies at the other end (I'm ex-HMRC staff).

As you said it is a problematic sector to work with; I have lost count of the number of occassions I've instructed clients "No UTR no subcontractor payments" and been completely disregarded on that point. Sadly there are all to many people working in the sector who are either unaware or disregard the gravity of the 'offence' of non-operation/blatant mis-administration of the CIS scheme until it's far too late.

 

 

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By jjswjjsw
02nd Sep 2012 12:21

CIS Returns

We only undertake the CIS returns where we also do the book-keeping so I can't comment on charging as it's included in the book-keeping fee but I would say I find CIS returns tend to take longer per person than payroll. 

We wouldn't want to receive figures alone without great confidence in how they were calculated (and in that case most client's will submit themselves) as the chances are that at some point a return will be incorrect and the client will accuse the agent of the mistake. We have recently taken on the book-keeping & CIS for a partnership where we were previously processing the payroll, in the 3 submissions they'd made this year 2 are incorrect (when cross-checking against the invoices and payments made).

Definitely look at taking on the CIS but agree clearly who is going to work out the figures for the CIS returns and who is going to verify the sub-contractors and how and when the information is going to be communicated to you. If you're verifying sub-contractors factor in sufficient to cover your time where you have to phone HMRC when the electronic verification comes back at 30% (for most of the Polish carpenters I find, but telephone HMRC and they should be 20%).

Also think about how you're going to return the figures paper, HMRC website, other software and confirm who is producing the subbie monthly statement. We use Moneysoft from within the software we can verify, submit the return, produce and email the statement. If the subbie doesn't have an email address the statement is emailed to the client and they print it & hand it out.

The biggest downside I've found with CIS is that it's another commitment of dates to meet in the middle of the month making planning holidays harder (if you're a small business as we are).

As Mr. Mischief says HMRC's systems are equally poor for CIS - we're currently appealing a CIS penalty issued by HMRC for not submitting a return when the penalty period pre-dates the company registering as a contractor on the CIS scheme.

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By non-sequitor
02nd Sep 2012 14:37

As others have pointed out, your question is akin to asking about the length of the proverbial string. If you're working for different contractors, you may find a "one price fits all" approach isn't the right way to go as some contractors will be on the ball and provide information/respond to emails quickly, and others will give you the information at 5.29pm on the 19th of the month.

At the moment, for a "good" contractor, I charge £20 (fixed) +£10 per subcontractor per month, so even for a Nil Return, there's a £20 fee to cover the time to email/confirm/submit the return. For a more problematic contractor where I end up doing a lot of chasing/emailing, I charge a higher "fixed" element (£30) and increase the variable subcontractor fee to £15 per subcontractor/per month to reflect the additional time involved.

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By Oppco
11th Sep 2012 12:49

CIS

Tread warily, CIS appears straightforward at first glance but can soon turn into a nightmare unless you get full cooperation from a client who also understands how it works. The deadlines are very tight

Verfication, monthly deadlines, month end cut off, issue of certificates and reconciliation. If the client is also making sales within the scheme you also have the set off issue to deal with.

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By teresaweezer
11th Sep 2012 15:12

Oh dear, we are too cheap!

We have a client for whom we deal with the book-keeping and CIS as agents.  It is not a problem and for the past 5 years everything seems to have run smoothly.  We use the HMRC returns product online which is excellent.and issue the certificates to the subcontractor.  The verification process only takes a few seconds.  For an average of 20 sub-contractors per month, certificates and monthly CIS payment, together with the P35 figure, we charge £30!  Time for a chat to the client wouldn't you think?! 

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By Chris Farrant
11th Sep 2012 19:04

Depends on your payroll and recruitment systems and procedures

I have run CIS along side PAYE for contractors and a lot of the admin is upfront i.e When you have a new subcontractor joining. The contractor needs to be aware of the rules as to the status of the sub-contractor particularly if there is to be long term work.

Given the nature of the industry this can be a logistical nightmare. Set the rules and have a clear procedure and it can be fairly painless. 

A lot of contractors still don't understand the consequences of non-compliance and will start someone with out the relevant details required to register and verify the sub-contractor.

I used a web based payroll/CIS system called Payroo (www.payroo.com) which has all the on-line filing and verification procedures for registering sub-contractors, producing self bill invoices, deductions and statements and handled 70 or so subbies with no problems at all. 

For up to 9 employees the software was free anything over that and there is a £3 per employee filing fee at the year end. There is also an agency version.

I used journals for the PAYE and invoicing in Xero Accounting to record the costs and produce a weekly posting document to enter into Payroo.

As for charging, there are some agencies that do this for £15 per subcontractor per week!

I charged £10 for initial set-up of a joiner and then £3.50 per person per week. It took me half a day to process 65-70 because of the variations in amounts.

Good luck. Feel free to contact me.

Regards

Chris

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Replying to TeeHassan:
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By DMC151
12th Sep 2012 12:04

Thanks for the advice; I'll look into the software you recommended also.

As you pointed out, part of the problem with CIS work seems to be a lack of willingness on the part of some contractors to submit properly to the scheme; HMRC don't operate with much discretion re: penalties & fines for non-compliance/mis-administration and the consequences can prove extremely costly for the unwaray in the long term.

Thanks

David

 

 

 

 

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Replying to Confused78:
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By Chris Farrant
12th Sep 2012 16:19

Charging

DMC151 wrote:

Thanks for the advice; I'll look into the software you recommended also.

As you pointed out, part of the problem with CIS work seems to be a lack of willingness on the part of some contractors to submit properly to the scheme; HMRC don't operate with much discretion re: penalties & fines for non-compliance/mis-administration and the consequences can prove extremely costly for the unwaray in the long term.

Thanks

David

Your welcome.

P.S. The Contractor charged the costs onto the Sub-Contractors, as most did not produce their own bills, and it was presented as a service.

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