CIS Tax

We used to split our invoices 50/50 with materials/labour so we were taxed 20% on half the invoice which in effect is 10% of the nett amount.

I rang the tax office and they said we could split the materials/labour however we wanted to.

We now just get the contractors to deduct 20% of the nett amount. We did this as we are behind with tax so it is a good way of paying them back and you cant spend the tax mans money and maybe will get a refund in a year or two.

Hope this helps Martin
 
we have split our invoices to show labour and materials! we charge 75% materials and 25% labour! my biggest problem is getting statements from the client to prove they have stopped the tax on there utr number!
 
That's a good point Porter. We get statements regular as clock work from our clients but that's because they have to prove they have paid me. It obviously doesn't work as well when there is nothing in it for them and maybe the onus should be placed on the client for producing these receipts in a timely fashion.
 
the problem for me is we are a small company mainly doing street work for your average builder who is quick to demand that we stop cis on our invoices! then as im busy pricing work and occasionley on spanner you forget to check they have sent you a statement untill you get your tax bill at the end of the year! must cost me a couple of grand a year i thinks! not good and i kick myself for it!!!
 
fully agree with you! another nightmare!!! extra hire!! how hard is that to get paid for!!!
 
porter said:
the problem for me is we are a small company mainly doing street work for your average builder who is quick to demand that we stop cis on our invoices! then as im busy pricing work and occasionley on spanner you forget to check they have sent you a statement untill you get your tax bill at the end of the year! must cost me a couple of grand a year i thinks! not good and i kick myself for it!!!
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porter said:
fully agree with you! another nightmare!!! extra hire!! how hard is that to get paid for!!!
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We are a tiny company too Porter but we have the utr number that makes it a bit easier on us. I'm afraid as philiousmaximus said there is only one way to do it and that is tight paper work, not that we have but we do try. I found it a lot better when I finally managed to talk my Mrs in to working part time which helped us out loads. As for additional hire, again it can be tough but if your just as tough you will get it. We have used it as discount in the past but as the yard nears empty we have to start getting tough for hire payment as it wont be long before we are having to hire or buy more gear in. It's never easy, you just have to do it as best you can.
 
Dont know about the UK tax system, but in Ireland they've changed the vat system and now the principal contractor is responsible for paying the vat direct to the revenue. Its much better because you've not got a vat bill and any vat receipts you put in can be credited to your tax dues, simplifies everything makes it a lot easier for small companies.
 
You might have to explain that one again Brandy. You bill as normal but they pay you without the vat and then they pay the vat man direct. Sounds good, but how do claim back your vat output? I've always felt like a collection agency for the vat man and this sounds interesting.
 
The subcontractor which is us, puts the relevant Vat on the invoice but with a proviso,

Vat on this invoice is accountable for by the principal contractor.

He does'nt include the vat amount in the payment on the invoice, instead he is accountable to the revenue for paying it in. As you said AOM, were not vat collectors for the revenue any more, the only exception would be if you were selling materials then you would have to charge vat and pay it in. Your vat receipts for purchases are claimed for in the normal way, or you can offset them against your tax and pay the balance if there is one. I think the reason it was changed was in the current climate small firms are struggling and maybe using the vat to keep going, so the revenue might see it as a safer bet to collect it of the bigger companies and if not they have more assets to seize. makes sense I suppose and at the same time making our life easier.
 
Sad though it is to be born from hard times I actually quite like the sound of that. Dangerous ground to use the vat man's money for anything other than paying him. What about any private individuals you work for do you have to collect vat from them, surely they couldn't be held responsible for vat?
 
aom said:
Sad though it is to be born from hard times I actually quite like the sound of that. Dangerous ground to use the vat man's money for anything other than paying him. What about any private individuals you work for do you have to collect vat from them, surely they couldn't be held responsible for vat?
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If their not vat registered it would be a different ball game, he cant claim the vat back, so I suppose it's how you both want to play it. The legal position would be that you charge vat and pay it in.
 
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