I have a Limited Company client only recently incorporated because the previous limited company went into liquidation owing HMRC a small fortune. The new company won't be employing anyone, not even the Director at this point. We're trying to avoid the need for a PAYE scheme so that they can't get into trouble financially again however a couple of their customers are in the Building industry and are asking for a CIS number before they will pay them. Are we legally obligated to register for PAYE/CIS ? or is there some kind of exemption you can apply for ? many thanks
First of, as a Limited Company you have to have a director and by default, they would be able to take a remuneration or dividend - whether they do or not is irrelevant. As such, a PAYE registration should be made. This has 3 functions: 1) you will need it to file end of year P35/P14, even with no employees or director taking no salary, a nil return would have to be made, 2) if the company uses sub-contractors, the deductions you make will have to be reported via CIS300 each month and the monies paid over to HMRC and 3) the sum of the deductions made to sub-contractors and any deductions your company has suffered also needs to be reported on the P35.
The CIS number the customers are asking for is the company's UTR number - this is the Corporation Tax UTR number which you have been informed of by HMRC. Also, if the company is doing any work within construction industry, they have a statutory requirement to register the company for CIS. I am not aware of any exemption.
As an afterthought, if they work in contruction and cannot be verified by their customer, they will lose 30% tax against their bill.
Hope this helps and if you need any further clarification, please contact me.
Best regards
-- Edited by Anderson Accountancy on Thursday 14th of July 2011 10:48:52 AM
I was actually under the impression that if there are no employees and no intention to pay a Director there is no legal obligation to apply for a PAYE scheme - however reading your reply makes me realise that the only way to get back any tax deducted from invoices is via a P35 - and you need a PAYE scheme to file a P35 ! As far as I'm aware we haven't received a UTR number yet - but I will check. Seems likely we have no alternative but to apply for CIS. It had already occurred to me that we'd lose 30% if we didn't have a number. Oh well, bite the bullet !! Thanks for the reply - sometimes just writing down your question focuses your mind where it should be - I'd already answered half of my own question earlier when writing with regard to if we took on any subbies !
