Anyone? do you run a Limited Company & get paid gross on the CIS scheme?

Discussion in 'OT (OFF Topic) Forums' started by AbbieCadabra, Sep 20, 2008.

  1. AbbieCadabra

    AbbieCadabra Hardcore MB Enthusiast

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    i just wondered if anyone else has any knowledge of this?

    we're a small joinery company with 5 employees in total, including me & husband as company directors. i do all the day to day paperwork & everything goes to our accountants once a year for the returns etc.

    to my horror, i got a letter from HMRC this morning saying we have 'failed compliance' & will now be taken off gross payments & be subject to 20% deductions against labour costs that we invoice.

    i own up that it's my ignorance in failing to understand the implications of a couple of late PAYE payments, but as we are currently paid gross, we don't have any CIS forms or returns to complete & i think i've become a bit 'blind' to the whole subject (plenty of more important things to worry about!).

    we have the right to appeal, which i will obviously do next week. being a Limited company, if the appeal fails, we will be able to offset the deductions against monthly PAYE due. it's not ideal, but at least we won't have to wait until our year end to claw the cash back.

    having a quick read around on the net, it seems a high % of companies are falling foul of the new rules on CIS & loads are being affected by this. if not Limited, some are even having to fold because they just can't trade under these circumstances!

    so, anyone had any dealings with the appeals procedure?
     
  2. Meldrew2

    Meldrew2 Hardcore MB Enthusiast

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    Alternatively, just form another limited company then close the first one.....
     
  3. OP
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    AbbieCadabra

    AbbieCadabra Hardcore MB Enthusiast

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    erm, that's one option i suppose!

    no offence, but at the moment, i think i'll put that somewhere near the bottom of 'possibilities'...:)
     
  4. IanA2

    IanA2 Hardcore MB Enthusiast

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    It's probably what your accountant will advise.
     
  5. Shude

    Shude MB Club Veteran

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    I spoke to an IT contractor a while ago who said he wound up his business after 11 months every year and started a new one simply to avoid all the red-tape!
     
  6. Ade B

    Ade B Hardcore MB Enthusiast

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    That sounds a bit iffy..

    Ade
     
  7. OP
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    AbbieCadabra

    AbbieCadabra Hardcore MB Enthusiast

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    well, you learn new stuff every day!

    i suppose i can see it as an option if it really does start to affect cashflow, but as we can offset it on a monthly basis, i'm hoping this won't be the case.

    it's just going to be a royal pain in the neck having to break down the labour costs on each invoice (don't ask me, that's the job of The Man of the House :eek: ) & deal with the CIS stuff that will need filing each month.

    i'll do a bit more digging around to see if i can find any 'tips' for the appeal letter, just have to cross all our fingers & toes & hope it's successfull!
     
  8. Piff

    Piff Hardcore MB Enthusiast

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    Our sub-contractors have to breakdown labour & materials if they are not "gross". The breakdowns we receive are to be taken with a pinch of salt. I wouldn't lose sleep over the calculations necessary!

    I'm just leaving a Ltd Co, registered with CIS, and setting up as a sole trader. My current thinking is to keep a low profile, registering with as few govt agencies as possible. Does anyone know how they find out about me if I don't contact them?
     
  9. OP
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    AbbieCadabra

    AbbieCadabra Hardcore MB Enthusiast

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    thanks for the info Piff :) , hubby just gone out but we've spent a good hour or so actually talking thru the implications of all this - my head hurts! :crazy: an early call to our accountant will be made in the morning...& i'm quite sure my head will be hurting even more then! :rolleyes:


    IMO i wouldn't recommend trying to go under the radar with your new venture. i know the whole system is pretty incompetent, but if you're registering with one agency for something, i think they'll ALL catch up with you eventually (& no doubt it will all be backdated from when you started).

    also, in the current climate, i think people are less likely to turn a blind eye to anyone getting 'away' with something & you'll get reported somewhere along the line.

    good luck with it! :)
     
  10. Benzowner

    Benzowner Hardcore MB Enthusiast

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    I am a director of a company subcontracting in the building trade who lost our gross payment status about 3 years ago and to be honest it was the best thing that could have happened. You can offset your PAYE against the tax deduction on a monthlt basis, so effectively no loss of revenue cash flow, and as for working our labour ratio to materials, I just guestimate a figure. Our last financial year, the Tax man owed us £9000.00 which we offset against corporation tax. If you need any more info, send me a PM, better to discuss in private.

    Geoff
     
  11. OP
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    AbbieCadabra

    AbbieCadabra Hardcore MB Enthusiast

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    after the day i've had, those are very comforting words Geoff! :D

    thank you for the offer to PM, i may take you up on that, after i've spoken to the accountant tomorrow! ;)

    thanks again
     

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