CIS LTD COMPANY

[Emilie]

Hi, I have a client with a LTD company which is cis registered. He is the director. His company invoices the recruitment agency with 20% cis deducted. He is the only person in the company and as director wud He be classed as an employee paying PAYE and NIC. How would He reclaim the cis paid by the company. Does he need to submit monthly payroll and how do I set I against the cis paid.

Hmrc would not let him be gross payment.

Thanks in advance Emilie

 

[Mitchells Bristol]

Hello there

You will have to reclaim the CIS at the end of the tax year - you may be able to convince HMRC to offset the reclaim against the corporation tax liability.

 

[Newchodge]

He should be invoicing 100% of his charges, and then getting paid with a 20% deduction.

If he is the sole employee, and is personally carrying out the construction work that is CIS deducted, and is not paid through PAYE, he should follow this advice. https://www.gov.uk/guidance/claim-a...-scheme-deductions-if-youre-a-limited-company

 

[Emilie]

Hi,
thank you for this. It appears the Ltd company invoices the agency for the services carried out by him and deducts 20.

He has then been withdrawing the net amount to his personal account thinking the cis paid is his.

Is it possible The cis is his.

Thanks emilie

 

[Newchodge]

Is it possible The cis is his.

What do you mean? If the CIS has been deducted it won't be there for him to have it. It will have been paid to HMRC.

As he is your client, are you acting as an accountant or what?

 

[Newchodge]

Just re-read your first post. Why is he invoicing a recruitment agency?

 

[Emilie]

There are some agency’s which get the subcontractors for the bigger companies.

Yes cis is been deducted on the invoice from the company to the agency and paid to hmrc.

 

[Ione]

In which CIS country LTD company is registered?
Who is invoicing?

 

[Newchodge]

There are some agency’s which get the subcontractors for the bigger companies.

Yes cis is been deducted on the invoice from the company to the agency and paid to hmrc.

What should happen:

1.Ltd undetakes construction work and invoices full cost to contractor.

2. Contractor deducts 20% from invoice which they pay to HMRC and the remainder they pay to Ltd.

3. Ltd pays employees who have done the actual work through payroll and offsets CIS deducted against tax and NI due to HMRC.

4. If there is a balance that has been deducted and not offset, Ltd claims at year end.

Which step is causing you a problem or is not happening?

 

[STDFR33]

In which CIS country LTD company is registered?
Who is invoicing?

Are you referring to the Commonwealth of Independent States, rather than the Construction Industry Scheme to which the OP refers?

 

[Ione]

For example, in Kazakhstan local company shall deduct and pay a 20 % withholding tax on the amount specified in an invoice from a foreign company which rendered the services and issued an invoice for such services. BUT you can avoid such deduction in the cases specified in an interstates agreement (for example between Kazakhstan and UK).

 

[Emilie]

Company is registered in UK.

The LTD company invoices the agency’s/customers with gross, 20% cis and the net pay. The agency/customer pay the LTD company the net pay.

 

[Ione]

Are you referring to the Commonwealth of Independent States, rather than the Construction Industry Scheme to which the OP refers?

Yes, I am referring to the Commonwealth of Independent States. Perhaps, I have misunderstood the described situation.

 

[Emilie]

Hi Cyndy,

Yes that is exactly how I thought it should be done. Unfortunately it has not been done this way.

1. Do I need to set him up as an employer?

2. Can I use basic tools hmrc to offset his cis against PAYE/nic.

3. To date no PAYE/nic has been paid out. Is it too late to set all this up and submit for 17/18.

Thank you

 

[Newchodge]

Hi Cyndy,

Yes that is exactly how I thought it should be done. Unfortunately it has not been done this way.

1. Do I need to set him up as an employer?

2. Can I use basic tools hmrc to offset his cis against PAYE/nic.

3. To date no PAYE/nic has been paid out. Is it too late to set all this up and submit for 17/18.

Thank you

1. the Ltd company is the employer, and needs to be set up as such if it is to pay him as an employee.
2. I haven't used basic tools so I don't know if it icludes CIS offsets. It should.
3. If he has been paid through 17/18 HMRC retrurns should have been made before he was paid, unless he was paid below £113 per week. If you wanted to re-write history you would have to submit the final return for 17/18 before 19 April. You won't get employer registration through in time to do that.

On what basis has he been taking money out of the ltd company? Presumably not as dividends, and clearly not as salary, so presumably he has been taking director's loans. Which may be a bit messy to sort out. However, I am not an accountant, just a payroll provider. You need an accountant to help you sort the mess.

 

[Emilie]

Ok thank you.

I will set up employer. As he has not done any PAYE/nic. Can the company just claim back the cis.

 

[NicoJ]

If the company is registered as a subcontractor it will have a PAYE reference, which you can use for the payroll.

Your first step is to establish that the company is actually the one having the deductions taken from it's income and not the individual.You should have CIS certificates from the agency with the details on there. That would be the first thing I would do.

 

[Newchodge]

If the company is registered as a subcontractor it will have a PAYE reference, which you can use for the payroll.

Your first step is to establish that the company is actually the one having the deductions taken from it's income and not the individual.You should have CIS certificates from the agency with the details on there. That would be the first thing I would do.

The company has not been running payroll. That is the problem.

The company owner and sole employee has just been removing the money from the company.

CIS cannot have been deducted by the agency from the employee. The agency os not paying the employee. The agency is paying the company.

 

[NicoJ]

If the company is a registered subcontractor it will have a PAYE reference. Whether that is being used or not is not the point. The OP does not need to set up another scheme.

And, yes the agency can have deducted money from the individual. You would be surprised how many agencies get this wrong. Hence my advice to check the paperwork.

 

[Emilie]

Iv registered The company as an employer today. Am I best to claim back the cis from hmrc or wait till all set up and file a late submission through hmrc rti and offset the cis the company has paid against his PAYE/nic due.

 

[Newchodge]

The deadline for submissions for 17/18 tax year is 19 April, which you will not meet as you won't get the PAYE and Accounts Office references in time so you will have to do an Earlier Years Update.

I have never found a way to claim CIS through the EYU process, but I am willing to be corrected on that.

 

[NicoJ]

As noted before you will already have an active PAYE reference, therefore you just need to send in an EPS before the 19th April.

Please do check that the agency have used the company UTR and not the individual UTR though.