Help and Advise please.

[Churchill]

All I know is CIS is a pain as when I want to pay a subbie I have to contact HMRC go through one of those lovely telephone option menu things, then answer loads of questions confirm that my professional rep is on the line if I lie just to get a reference number to find out if they are gross, net or net higher; all this regardles of if I am paying £5 or £5m; 'tis a pain

Could you devise a "Plan B" that would make the process easier...

[Halo Jones]

All I know is CIS is a pain as when I want to pay a subbie I have to contact HMRC go through one of those lovely telephone option menu things, then answer loads of questions confirm that my professional rep is on the line if I lie just to get a reference number to find out if they are gross, net or net higher; all this regardles of if I am paying £5 or £5m; 'tis a pain

[NickFitz]

Hi I am new to the Contract game as ive always dome private work for myself.
I may have the chance to take my gang on to a building site to do a few month groundworks. The agency it is through does not pay self employed people as it goes through an umbrella company.

Is there a way round this at all so I dont have to pay a company to pay me?

If not then is it something I can use on a week to week or month to month basis without being tied it for say 12 months?


Thanks,
Kirk

As others say, we don't know much about contracting in the sphere of the building industry and how you might go about not having to use the agency's approach, but as far as the umbrella company is concerned there shouldn't be any tie-in beyond the period for which you use its services. An umbrella company is a weird combination of a payroll service provider (for which you pay the weekly fee) and an employer (which is how they handle the PAYE/NI aspect of things in return for their weekly fee) but, as with any service provider or employer, you can't be tied to work exclusively with or for them for any set duration unless you sign a contract to that effect. In IT, no umbrella company would expect you to sign such a contract; you can terminate your agreement with the brolly at any time, although the agency might whinge about having to change those parts of the arrangement that affect them.

As others have mentioned there are a number of tax issues that apply specifically to contracting in the building trade about which we on this forum know nothing, but the stuff Paddy links to above, together with Zippy's advice and Clare@InTouch's suggestion of consulting an accountant, will hopefully help you to work out the best approach. If in doubt, it's always worth a few bob getting advice from a professional accountant and/or tax advisor with experience in your line of work; it can work out cheaper than if you try to deal with it yourself and the taxman jumps on you at a later date.

Good luck moving your business forward - some people on here love the idea of being a "director" but wouldn't understand the concept of running a business with employees if it bit them on the backside

[EternalOptimist]

Online
HM Revenue & Customs

good link paddy

[Paddy]

Self employed and in construction: Construction Industry Scheme (CIS)

What is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme defines the rules by which payments to subcontractors must be made by contractors. It also allows for subcontractors to be paid their gross amount so they themselves can organise their income tax contributions.

Under the Scheme, all payments made from contractors to subcontractors are determined by the subcontractor’s tax status. Depending on whether the subcontractor is an employee or self employed, this may require the contractor to make a deduction, which they then pay to us, or the sub contractor can apply to be paid a gross amount.

Recent changes to the CIS
The new CIS began on 6 April 2007. It aims to:
•Reduce the regulatory burden of the Scheme on construction businesses;
•Improve the level of compliance by construction businesses with their tax obligations;
•Help construction businesses to get the correct employment status of their workers.


Here’s how it works:
•Contractors;
•There are no CIS cards, certificates or vouchers;
•must 'verify' new subcontractors by contacting HMRC;
•Subcontractors are still paid either net or gross, depending on their own circumstances;
•HMRC decides and tells the contractor whether to pay net or gross;
•There is a higher rate tax deduction if a subcontractor cannot be 'matched' on the HMRC system. This of course encourages the subcontractor to register. This increased rate will apply until the subcontractor contacts HMRC and registers;
•There are no CIS annual returns, only monthly returns;
•Contractors must declare on their return that none of the workers listed on the return are employees – i.e. that instead, they are self employed. This is called a status declaration;
•Nil returns must be made when there are no payments in any month. These can be made over the telephone as well as over the Internet or on paper. There will be financial penalties for failure to submit a return (including nil returns).


How much must I pay?
Contractors are required to deduct 20% of the gross payments to registered contractors and 30% from the pay of unregistered contractors.

Is my business covered by the Scheme?
Most probably, yes. The Scheme covers all types of businesses including:
•Companies;
•Partnerships;
•Self-employed individuals (contractors or sub-contractors).


The Scheme has redefined the terms 'contractor' and ‘subcontractor’ - they now have broad, special meanings.

Contractor: a contractor is a business or other concern that pays subcontractors for construction work. Contractors may be construction companies and building firms, but may also be Government departments, local authorities and many other businesses that are normally known in the industry as ‘clients’.

Non-construction businesses or other concerns are counted as contractors if their average annual expenditure on construction operations over a period of three years is £1 million or more.

Anything other than the above, for example, non-construction businesses or other businesses that spend less than an average of £1 million a year on construction work, and private householders, are not counted as contractors thus are not covered by the scheme..

Subcontractor: a subcontractor is a business that carries out construction work for a contractor.

What if I am both?
Many businesses pay other businesses for construction work, but are themselves paid by other businesses too. If this is you, you should follow the rules for contractors in this situation, and when you are working as a subcontractor, you should follow the rules for subcontractors.

How the Scheme operates

Registering for the Scheme
All contractors must register with the HMRC for the Construction Industry Scheme. Similarly, sub contractors should register - if you do not, you will be charged a higher rate of 30% from your income. The other benefit is that the HMRC provide essential registration details that contractors and subcontractors will need to use when they deal with payments.

Registering for the Scheme – subcontractors
If you are a newly self-employed subcontractor since 5 April 2007 or you last had a temporary registration card CIS4 (T) that expired on or before 31 March 2007 and was not renewed, you should register for new CIS. This way, you avoid the higher deduction on payments received.

When should I register?
The sooner the better. The best time is when you, your firm, or your company is about to start work within the construction industry.

How to register
To register, or request more information, please contact HMRC.

Tel: CIS Helpline on
0845 366 7899

Online
HM Revenue & Customs

[Zippy]

Hi I am new to the Contract game as ive always dome private work for myself.
I may have the chance to take my gang on to a building site to do a few month groundworks. The agency it is through does not pay self employed people as it goes through an umbrella company.

Is there a way round this at all so I dont have to pay a company to pay me?

If not then is it something I can use on a week to week or month to month basis without being tied it for say 12 months?


Thanks,
Kirk

Work is better than no work, but I can understand why you wouldn't want to be ripped off.

The umbrella companies we (the IT Crowd) use act as a payroll (PAYE) service. The fee they charge is tax deductable but £25 per week/per timesheet (before tax relief) is not unusual. You are an employee of the umbrella co and can claim expenses.
The usual advice on here would be to set up a Ltd co and either pay an accountant or do your own books.

Seriously - chat with the umbrella co about what you will take home and you could always call the HMRC helpline to check 'em out, or ask for advice.

Right. The sensible (but probably irrelevant) stuff is out of the way so I have the usual questions
- do you like movies about gladiators?
- where is your porn stash?

Do we have any Ministers of Religion or share fishermen in tonight?

[Clare@InTouch]

I assume the agency has been burned by people not paying their tax and NI in the past, looking cynically of course the Umbrella could be the agencies own or a sister company.

Aren't there various tax certificates that apply to builders and their self employed status? There are some sector specific things that most of us on this forum won't necessarily know so can't help with sorry.

There are potential CIS issues with any building works, and the rules are quite harsh these days.

To the OP - your best bet would be to call an accountant and have a chat with them about your specific circumstances, although it does sound like an umbrella is your best option from the small amount you've said (which could be done weekly or monthly, not tied in for any period).

The posters here are unlikely to be able to help as it's a different industry.

[Churchill]

I assume the agency has been burned by people not paying their tax and NI in the past, looking cynically of course the Umbrella could be the agencies own or a sister company.

Aren't there various tax certificates that apply to builders and their self employed status? There are some sector specific things that most of us on this forum won't necessarily know so can't help with sorry.

Exactly.

Nicely put.

[TykeMerc]

I assume the agency has been burned by people not paying their tax and NI in the past, looking cynically of course the Umbrella could be the agencies own or a sister company.

Aren't there various tax certificates that apply to builders and their self employed status? There are some sector specific things that most of us on this forum won't necessarily know so can't help with sorry.

[Churchill]

You're as thick as a brick, that's close enough I reckon.

Well **** me, we're back in junior-high now are we?

[MarillionFan]

He's a bricky. This is an IT Contractor site.

You're as thick as a brick, that's close enough I reckon.

[Churchill]

<bump> newbie question that seems to have gone unnoticed.

He's a bricky. This is an IT Contractor site.

[kirkline]

Hi I am new to the Contract game as ive always dome private work for myself.
I may have the chance to take my gang on to a building site to do a few month groundworks. The agency it is through does not pay self employed people as it goes through an umbrella company.

Is there a way round this at all so I dont have to pay a company to pay me?

If not then is it something I can use on a week to week or month to month basis without being tied it for say 12 months?


Thanks,
Kirk