PAYE registration??

[mattley23]

Hi,

I am a sole trader and employ 1 person on 16hours a week. Should I registered for the paye scheme?

I also use one or 2 subcontractors, who are either sole traders or partnership businesses and pay their own tax, do I need to register for CIS scheme?

Anyones advice would be appreciated

 

[elaine@cheapaccounting]

When you need to register

As soon as you first employ someone, you will need to register as an employer with HMRC if one or more of the following is true:

• you're paying them at or above the PAYE threshold
• the employee already has another job
• they are receiving a state or company pension
• you're paying them at or above the National Insurance Lower Earnings Limit
• you're providing them with employee benefits

see here:


http://www.hmrc.gov.uk/paye/intro/register.htm


for cis see here:


http://www.hmrc.gov.uk/cis/intro/con-or-sub.htm#1


The returns are very strict for CIS - monthly and must be on time

 

[mattley23]

Thanks for those, already read them.

My accountant has told me that I didnt need to engage in CIS if i used a business who already pay their own tax. Basically ive been using a sole trader electrician for small cost installations on domestic property building work. He does his own tax return and pays his own tax the end of the year and I havent been deducting tax when I pay his invoices.

From reading the CIS info, that seems to have been the wrong thing to do. Can anyone verifiy that im doing the right or wrong thing from a CIS point of view.

Also, my part time employee works 16hrs a week at minimal wage therefore doesnt pay any tax or NI. Again my accountant has never advised me that I need to register for PAYE but I want to be doing things right so wanted to check up on what im being advised is correct??

 

[elaine@cheapaccounting]

I think you may need to register for CIS but cannot give a specific answer based on info posted.
Someone paying their own NI is irrelevant.

 

[talkinpeace]

Is ALL of your work domestic - billed to the householder - never another builder or contractor ....

 

[mattley23]

All my work is 100% billed to the home owner, im not a subcontracter myself and always work on my own projects directly for the homeowner.

I dont really use subbies myself, only an electrician every now and then really. The sparky generally comes in when I ask him too, does his installations and bills me. I pay the electrician direct.

The electrician is a company in his own right and not a self employed guy who works soley as a sub contractor.

 

[kyeb]

I would be tempted to get another accountant.

Whether they pay their own taxes does not govern whether you should register under the CIS Scheme as a contractor. At the point you start paying someone else and the work you provide is within the CIS scheme (which on the face of it seems like it is), you have to register as a Contractor under CIS.

Whether you are paid by a construction company or a private household is a little bit of a red herring and will only dictate what, if any, tax is stopped on payments made to you (not the payments you make to your subcontractors). A private houshold may pay you gross but you still have to operate CIS if it is applicable to the services you provide.

It makes no difference whether they are a Ltd Co, partnership or sole trader with regard to the CIS scheme -it is only a factor to consider for HMRC for employment status purposes.

If you continue to operate in this way I would speak to a different accountant and most likley register under the CIS scheme as a contractor. The alternative is that you get any subcontractors to invoice your client directly, this remove the above hassle but means you cannot make a mark up on their services.

Kye Burchmore