So, by taking my costs as profit, a customer has deducted £1200 in tax, rather than £300. They are saying tough, as they have already paid HMRC. Ok, from my part it will all sort itself out when I do my self assessment, but being a sub contractor and material based job, it leaves me at a loss on the whole job until then. Is there anything I can do, or just suck it up?
You could contact HMRC now and tell them what's happened. They can refund you if there's been a mistake.
Or just suck it up and make your invoices clearer/less clear (depending on how the mistake's been made). I'm sure at £350-400 odd a day, you can suck it up. 😉
If you are doing work for them this tax year then they could adjust their next payment to you if they are sure the materials costs are correct. Failing that you'll have to suck it up, put your 2012 return in early & make sure you clearly show materials costs on future invoices to avoid a repeat.
How much clearer can 'Costs for CIS purposes are £....' be?
How much clearer can 'Costs for CIS purposes are £....' be?
Lol - maybe you need an extra line on your invoice along the lines of:
Net amount (after deducting material costs) liable to CIS deductions £....
did you itemise your invoice showing a breakdown of materials and labour?
If your not interested in working for them again just tell them you've spoken to HMRC and the contractor will need to re-issue the payment and submit a revised CIS statement. If they say no then just tell them that you will need to report the error to HMRC naming them which you didn't want to do which would give them an opening to investigate their CIS records.
Cheers craigxxl, I'll consider that.
I gave them the same information that I have given them with every other invoice for the last two years - admittedly only one line, but it has been understood every other time, so it's an error on their part.
If you don't show a breakdown between materials and labour then you will be deducted on your whole invoice.
Regardless of whether they have done this before that is the correct thing to do, they should have informed you though.
They haven't deducted on the full amount though Bear - they fully understood what I told them, just mixed their figures up taking cost as profit/labour.
Costs are materials and sub-contract provision of plant & labour - I make a gross payment to my subbies without any deduction, so count their whole cost as 'provision of a service' for this purpose. My profit is a combination of my labour and markup, which is fully understood.
Ah, then they are wrong, they should call HMRC and explain, but you should be reimbursed regardless.
You sure you doing this correctly ? You say that you are not operating CIS on your payment to your subcontractors. This doesn't sound right.
Yeah, some of them are registered for gross payment with HMRC anyway and others are occassionally use, which I've been told by accountant is ok.
Unless they are registered as self employed (in which case they will come under CIS too) and invoicing you then HMRC will classify them as employees and can gross up the payments you've made to these occasional workers leaving you with a hefty PAYE/NIC bill.
They are companies providing a service, not individuals, but I will check again craig
probably just an error by the person inputting the payment. if there's another interim payment due, get them to correct it next time.
it's easier when your CIS 5
Probably not class the occassional use as employees, but CIS should be operated. If dont know payment status thats at 30%. CIS operates on companies too by the way.