I have a sole trader who for 10 years has been completing damp proofing work on 100% private house's, never for new builds or construction sites. I have just answered an Inland Revenue short enquiry regarding his sub contract payments which has been cleared up with out any problems. He has always worked with another sole trader who then invoices him for his share of the work. The Inland Revenue now says that my client should operate as a contractor and deduct 20% cis from his colleague. Has any body else had any experience of this as if this is correct it could apply to a lot of sole traders using sub contractors.
The tax law being quoted is Section 57 (2) Finance Act 2004. I have looked at this law and can not see anything that confirms the Inspectors view.