CIS payment query
Discussion
Following on from my thread about not getting paid made me think about something else, how do CIS4 payments work in this respect?
Ideally I would like to get paid gross of people and sort my own tax out but this is taken out of my hands legally and I have no choice but to let other contractors deduct my tax and pay it on my behalf. Who is responsible for the tax element if the builder doesn't pass the tax money element onto HMRC?
It should be the builders responsibility because I would have done everything possible to ensure the tax was paid by forwarding my CIS number etc to them. If it is the builder's problem then even if I didn't get paid for an invoice at all I should still be able to claim the tax portion as a CIS payment made by me shouldn't I.
Ideally I would like to get paid gross of people and sort my own tax out but this is taken out of my hands legally and I have no choice but to let other contractors deduct my tax and pay it on my behalf. Who is responsible for the tax element if the builder doesn't pass the tax money element onto HMRC?
It should be the builders responsibility because I would have done everything possible to ensure the tax was paid by forwarding my CIS number etc to them. If it is the builder's problem then even if I didn't get paid for an invoice at all I should still be able to claim the tax portion as a CIS payment made by me shouldn't I.
scottyp123 said:
Following on from my thread about not getting paid made me think about something else, how do CIS4 payments work in this respect?
Ideally I would like to get paid gross of people and sort my own tax out but this is taken out of my hands legally and I have no choice but to let other contractors deduct my tax and pay it on my behalf. Who is responsible for the tax element if the builder doesn't pass the tax money element onto HMRC?
It should be the builders responsibility because I would have done everything possible to ensure the tax was paid by forwarding my CIS number etc to them. If it is the builder's problem then even if I didn't get paid for an invoice at all I should still be able to claim the tax portion as a CIS payment made by me shouldn't I.
Took me a couple of goes so sorry if I’m misunderstanding you.Ideally I would like to get paid gross of people and sort my own tax out but this is taken out of my hands legally and I have no choice but to let other contractors deduct my tax and pay it on my behalf. Who is responsible for the tax element if the builder doesn't pass the tax money element onto HMRC?
It should be the builders responsibility because I would have done everything possible to ensure the tax was paid by forwarding my CIS number etc to them. If it is the builder's problem then even if I didn't get paid for an invoice at all I should still be able to claim the tax portion as a CIS payment made by me shouldn't I.
On your first part - as long as you get your deduction certificate each month (which the contractor should issue) then you’re fine. You can show you’ve been stopped the CIS and use it against your year end. What they do with the CIS monies are not really your issue or responsibility. You obviously expect that they are declared in turn each month and despite there being people who abuse it, I can’t imagine companies getting away with it for long once the circle is formed at the end of a year.
You won’t get a CIS cert if they haven’t paid you, so no, without that you can’t claim the tax portion on an unpaid invoice. To be honest if it’s at this stage with you and/or them, there are bigger issues.
Dg504 said:
Took me a couple of goes so sorry if I’m misunderstanding you.
On your first part - as long as you get your deduction certificate each month (which the contractor should issue) then you’re fine. You can show you’ve been stopped the CIS and use it against your year end. What they do with the CIS monies are not really your issue or responsibility. You obviously expect that they are declared in turn each month and despite there being people who abuse it, I can’t imagine companies getting away with it for long once the circle is formed at the end of a year.
You won’t get a CIS cert if they haven’t paid you, so no, without that you can’t claim the tax portion on an unpaid invoice. To be honest if it’s at this stage with you and/or them, there are bigger issues.
My question was sort of along the lines of you invoice someone £1000, they pay you £800 but never send you a deduction cert or even pay the tax on your behalf like they are required to do. Surely you can't be on the hook for any sort of tax payment still, they have knocked off the 20% tax portion and kept hold of it, its 100% out of your hands what they do and you have only been paid the net amount of the invoice, you could potentially end up paying another £160 in tax because someone has pulled a fast one because of government orders. If I was paid gross I would be in charge of my own tax bill.On your first part - as long as you get your deduction certificate each month (which the contractor should issue) then you’re fine. You can show you’ve been stopped the CIS and use it against your year end. What they do with the CIS monies are not really your issue or responsibility. You obviously expect that they are declared in turn each month and despite there being people who abuse it, I can’t imagine companies getting away with it for long once the circle is formed at the end of a year.
You won’t get a CIS cert if they haven’t paid you, so no, without that you can’t claim the tax portion on an unpaid invoice. To be honest if it’s at this stage with you and/or them, there are bigger issues.
Ok, I haven’t been on your side of things but without a cert in principle you’re stuck - you can’t claim you’ve been stopped the CIS without a certificate.
If they aren’t forthcoming with a cert most (you’d hope) will change their minds when you tell them you’ve got an upcoming tax inspection, unless they think they’re far too clever…
It also brings up the importance of having the audit trail of eg your £1,000 labour invoice, it being sent and accepted, them paying you £800 and it all being recorded in case of future dispute.
If they aren’t forthcoming with a cert most (you’d hope) will change their minds when you tell them you’ve got an upcoming tax inspection, unless they think they’re far too clever…
It also brings up the importance of having the audit trail of eg your £1,000 labour invoice, it being sent and accepted, them paying you £800 and it all being recorded in case of future dispute.
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