This is my first venture into the realms of CIS, and I'm struggling to get my head round it. I have a new client for self assessment only. He was in the CIS with his previous 'employer' (ok, I know it's not the right word, but I'm strugglingto find a better one) until December 2010, then became self employed and no longer in the CIS fold.
Self assessment is now interesting. Do I lump his CIS work (which I assume is as good as self employed) and his self employed income together, and outline the tax he has already paid somewhere else?
I don't normally allow myself to get so confused....help!!!
If he's still in the same trade then you might be able to consider the contractor to be just another customer. Probably best to find out a bit of history especially his start date of self employment - maybe he has a p45.
The tax deducted goes in box 80 of the full self employed supplement.
Tim
-- Edited by Don Tax on Saturday 27th of August 2011 09:07:18 PM
He's still in the same trade, it's just that he's no longer working for the contractor but has now thrown open his doors to the general public. The whole CIS thing confuses me. He worked for one person, he used their tools and equipment. For all intents and purposes he would seem to be an employee rather than a subcontractor.
No P45. It would seem that he finished his CIS work in December and started his new business in the January.
Definitely think of the contractor as a customer, not an employer - therefore he didn't actually start a new business in January. You'll be looking at least when he started at that contractor's, if not before as a start date. Presumably he's not been self employed prior to 6.4.10.
I know what you mean though about tools etc. I have one guy who's had only one customer in 20 years.
He worked for one person, he used their tools and equipment. For all intents and purposes he would seem to be an employee rather than a subcontractor.
CIS is simply self employment where part of the invoiced amount gets paid to the HMRC for the self employed person. What you describe sounds like a dodgy situation, not to be confused with 'by the book' CIS (whenever a contractor submits a return to CIS he has to tick a box to state that he has considered the status of the subcontractors and they genuinely are subcontractors, not employees - it seems like the contractor here wasn't entirely truthful in his returns).
Just treat it like any other self employment, include the total amount of the invoices issued by the subcontractor to the contractor in your calculations, regardless of CIS tax deducted. Come up with a tax liability for the year figure based on those total amounts, plus any work done outside the CIS scheme ie. for private individuals.
Then once you've done everything else, you can calculate the total CIS tax deducted and put that in the relevant box on the self assessment form. Deduct it from the total liabilty to find out the amount of tax owing (or it might be a refund due).
