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Subbie headache

Subbie has no statements from contractor - assume deductions made?

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Subbie client has no statements from the contractor to back up assertion that deductions have been made. Relationship with contractor has broken down and contractor will not speak to his bookkeeper or respond to emails.

On this basis would you assume on subbie's TR that he has had 20% deducted as he maintains and reclaim it? Could be a nice little scam going, there. 

 

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By Cloudcounter
25th Sep 2018 16:32

In the past I've written to the contractor on the client's behalf. One polite request for statements. If not forthcoming advise that we'll be reporting him to HMRC for not operating the CIS properly.

If you still don't get anything, then I'd proceed on the basis that tax was deducted and make it clear what's happened in the white space. It's always helpful if the subbie was paid by bank transfer so that you can prove that the contractor made the payments

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By andy.partridge
25th Sep 2018 16:58

That sounds a good idea.

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Replying to andy.partridge:
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By lionofludesch
25th Sep 2018 18:13

Maybe not be so brussen with the contractor as to threaten to report him.

Just say that you'll assume that 20% tax was deducted on the full amount and paid over by the contractor to the taxman, leaving the implication that HMRC will be knocking on the door if that's not so.

If you want to push it, say you're assuming 30%.

I think we need to bear in mind that sometimes folk get payslips and other stuff - and lose them. Lost count of the times I've been asked "can I have a duplicate P45?"

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By Cloudcounter
26th Sep 2018 09:51

I wouldn't threaten on the first contact. On the second. I'd only do it with the agreement of the subbie in case he might want more work in future.

In this case it's stated that the relationship between contractor and subbie has broken down, and that there have been several requests for the data.

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By AnnAccountant
25th Sep 2018 18:20

Tell subbie to Data Protection Act them - Request the info they hold.

Then tell him to bother keeping his paperwork rather then throwing it in the bin in front of his mates in the pub and boasting how "hard" he is.

Personaly, I'd send him packing now. If he can't be bothered to keep his papers, I'm not sure I could be bothered to act. Or to look at it another way, with all this mither, will you make any money on this job?

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By lionofludesch
25th Sep 2018 19:08

Whoa !

Let's not assume the subbie is at fault here.

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By andy.partridge
26th Sep 2018 10:01

I'm pretty confident the subbie hasn't mislaid them in this case.

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Teesside
By Teesside
26th Sep 2018 09:39

In the past I have always asked for bank statements to be at least certain of the amount received. I've also asked the client to contact HMRC and ask for what details they hold on their PAYE records or check their personal tax account if they have one or don't mind setting one up, too many times I've dealt with subbies who move about a lot and don't always realise they have been paid through PAYE instead of CIS especially if they use agencies to find them work.

I took on a new client recently who's previous accountant assumed everything he received was paid via CIS although they had no documents and the client insisted that it was all CIS. HMRC checked his TR later and found that majority of his earnings in the previous tax year was in fact PAYE and he's now facing a bill to pay back the refund he had previously received.

I found checking PAYE with HMRC is faster than asking for the CIS records (which they don't always release anyway).

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By bernard michael
26th Sep 2018 09:48

Is it not as simple as checking the subbie's invoices against the payments received? If there is a 20% difference tax has been deducted
Please don't tell me he hasn't kept copy invoices

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By Cloudcounter
26th Sep 2018 09:53

I suspect that the OP might tell you that there are no original invoices to keep copies of!

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By lionofludesch
26th Sep 2018 10:18

bernard michael wrote:

Is it not as simple as checking the subbie's invoices against the payments received? If there is a 20% difference tax has been deducted
Please don't tell me he hasn't kept copy invoices

Invoices ? Subcontractor ?

You're living in a fantasy world, Bernard.

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By andy.partridge
26th Sep 2018 10:21

Don't worry, the invoices are sound.

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Replying to bernard michael:
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By andy.partridge
26th Sep 2018 10:20

Is it that simple?

Imagine collusion between the parties where a rogue contractor agrees a particular rate with the subbie, doesn't pay across the CIS deduction but encourages the subbie to recover the 20% on TR.

It is a simple fraud that would benefit both parties, one which you and I would be subsiding.

You might think this unlikely, except the contractor has done a phoenix and in the last year I have managed to get the subbie off the serious defaulters programme.

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By mumpin
26th Sep 2018 10:05

Brussen and mither in one thread. This is quality!

Contractor often goes bust without issuing deduction statements. I think you just have to assume 20% deductions in these cases.

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