CIS Grey Area?

[NathanCk]

Hi, I am a freelance sprayer. I am currently working in a place spraying parts of joinery units that are going to be installed in a hotel. I've been told by HMRC before it's outside of CIS and they are bringing me in to spray them in a workshop, I am not manufacturing them or installing them I am just spraying them in lacquer and that's it.

HMRC told me to reference CISR14250 - The Scheme: construction operations: painting or decorating to them but they want an exemption certificate. I haven't been able to get one as HMRC want me to fax them with the details.

I wouldn't mind the CIS coming off as it would help me get a mortgage for my house but once the rate is taken off 20% I am left with less than minimum wage once my own expenses is accounted for.

Not sure what to do now about this. Would appreciate any advice.

 

[TheSkyisGray]

It’s a shame your client won’t read through the guidance and come to their own view. If HMRC have offered confirmation pending the facts then definitely go for this.

CIS deductions just affect cashflow, they shouldn‘t affect the amount you can borrow since this is usually based on taxable profits. If you can’t afford to live on the income from this work, then maybe review your pricing.

 

[DWS]

From what you say it sounds as though the work may not be within CIS but at the end of the day it is up to the Contractor, if they insist on deducting 20% and paying this to HMRC then there is not much you can do about it, depends how much you need the work.
You definitely need to look at your pricing if the 20% deduction means you are earning less than the minimum wage, if your expenses include materials then if you can include these on your invoice they will not be liable to the CIS tax deduction.

 

[UK Contractor Accountant]

I would say that the spraying is outside of cis as the spraying is being done offsite.

The cis tax deductions don't have any impact on your hourly rate - your income is grossed up for the tax deducted on your tax return and you are given a credit against your tax liability for the year for the cis tax deducted at source.

 

[Bobbo]

I wouldn't mind the CIS coming off as it would help me get a mortgage for my house

How?

 

[VJR Business Support Ltd]

I wouldn't mind the CIS coming off as it would help me get a mortgage for my house but once the rate is taken off 20% I am left with less than minimum wage once my own expenses is accounted for.

Not sure what to do now about this. Would appreciate any advice.

CIS is only charged on labour not materials, so maybe look at how you price/ format your invoicing.