Sub-contracting myself to another plumber

[gravy88]

Hi all, i'm just after some advice/guidance really, as i'm still relatively new to being Self-Employed. This week i went into help my old gaffer for 2 days to help him fit a boiler, we were both a bit unsure as to how we go about payment for myself, can i just simply bill him my labour & he writes me a cheque...job done? Or does it involve CIS etc etc...

Any help would be appreciated please, thanks in advance! :19:

 

[mfgs]

Send him and invoice for your labour and then you deal with the tax on your tax return.

 

[gravy88]

Thanks pal

 

[hammers4spanner]

you can give him your utr number and he can pay your tax online and issue you with a payment slip

or he can go through a finance company an they will do it all or easiest way is just to declare end of year

 

[anz]

Can you do that though? Pay a subbie and get them to declare it themselves?
I thought everything had to go through CIS?

 

[hammers4spanner]

why not???
your self employed its upto you to sort your books

 

[kimbo]

I find the best way is to bill the customer for your labour as long as you tell them. I do that a lot it saves a lot of hassle

 

[AWheating]

you can do it both ways. If the person/company your subbing to is registerd then the hmrc prefere you to be paid via CIS if you have your utr number. If your utr number has not come through then it would be 30% emergency tax untill you have it.

you can also do it the other way like you would a private customer and pay the tax yourself when you do your self assessment.

for example i sub to one or two companies on contract work, its all CIS. i also give a fellow engineer a hand on some of his work and i treat it as a private job, its quite easy to do and put into your self assessment at the end of the year.

 

[deandive]

I wouldnt bother with the CIS route if you can help it, its alot easier to tell hmrc what you owe them and write them a cheque, than it is to get money back off them (fuel, insurance, stationary etc). the less the criminals , sorry government, know about your earnings the better.

 

[Mrs Tara Plumbi]

Send him and invoice for your labour and then you deal with the tax on your tax return.

This is easiest for everyone
BUT it is wrong according to HMRC.

I don't like to bring bad news and I don't like it anymore than the rest of you.
Also who ever wrote the rules at HMRC has NO idea of working in the real world - they say that all of the paperwork and checks must be done BEFORE the subcontractor does anywork.

It is a hassle setting it up but once you have it is done and it is then easy for you to do sub contracting wor for anyone at a moments notice.
BTW according to the HMRC it is the main contractor who could be in trouble for not managing take and payments to labour correctly - so if he gets set up right he will also be able to employ other subbies easily in the future:
HM Revenue & Customs: Construction Industry Scheme

 

[TBServices]

CIS is only for contractors and sub contractors. You are neither. Just give him an invoice

 

[Mrs Tara Plumbi]

When you are both set up.
Main subcontractor will stop 20% from your pay for labour (but not any materials you supply).
He will declare that to HMRC by 19th of the following month (and should pay it to HMRC then too).
AND he must give you a statement telling you what was deducted. (let me know if you want an example statement).

Keep the statements and give them to your accountant at the end of the year - it prooves some of your income tax was already paid for you by the main contractor.

 

[TBServices]

It only applies if the old gaffer is contracting/sub contracting to a main contractor.

If he's fitting a boiler in a private property, not under any contracts, CIS is not an issue.

 

[lame plumber]

Agree with Tp, when I chatted to the devil, he stated that any contractor working for another contrator has to go and use the cis scheme, if the beggar thinks youve pulled a fast one, he'll go after your dear old gaffer for the money owed as well as you.

 

[Mrs Tara Plumbi]

Some of us must have misread and misunderstood the OP - was it me?

If your old boss was the customer and you were fitting the boiler in his house (or he house of his kids) then yes it is just a self employed job like any other, but why ask the question.

I assume your old boss is a heating engineer - he had a heating job and OP helped on the job being employed by old boss for 2 days. A customer paid the boss and the boss paid OP.

In this case the boss was responsible for tax and should make sure HMRC procedures are followed. PAYE can apply even for first 1 or 2 days work, so can CIS.

 

[gravy88]

Thanks for the replies, i can see there is some confusion and uncertainty about the sub-contracting rules.

The job was not for him privately, it was one of his customers. (Old boss billed customer)

I am registered with CIS, and i do have my own UTR number, so am i best just sending him a bill for my labour, then he goes through the CIS?


Last month i fit a bathroom for a bathroom company near me, they asked for my UTR number so i gave them that and they send me a cheque through the post with a copy of what was deducted i think it was about 20%, so i ended up about £200 down due to the tax is that correct?

The best way really then is for me in future to give a bill directly to the customer, then it cuts all this hassle out..

Thanks

 

[TBServices]

There is certain criteria he has to fulfil to be eligible to pay you through CIS.

If he's not CIS registered, which he won't be, he can't use their services.

 

[Mrs Tara Plumbi]

Thanks for the replies, i can see there is some confusion and uncertainty about the sub-contracting rules.

I'm not confused! It's just everyone else! 🙂

The job was not for him privately, it was one of his customers. (Old boss billed customer)

I am registered with CIS, and i do have my own UTR number, so am i best just sending him a bill for my labour, then he goes through the CIS?


Last month i fit a bathroom for a bathroom company near me, they asked for my UTR number so i gave them that and they send me a cheque through the post with a copy of what was deducted i think it was about 20%, so i ended up about £200 down due to the tax is that correct?

The best way really then is for me in future to give a bill directly to the customer, then it cuts all this hassle out..

Thanks

My first reply had link to take you to HMRC CIS page.

This link is for anyone who is going to employ a subcontractor : HM Revenue & Customs: Contractors responsibilities

It really isn't difficult to set up this system and if someone like your old boss or any others reading this are employing a subcontractor this is the system for paying them.

As the subcontractor it is really important you get a statement from the main contractor as proof that your tax was deducted. That statement can be on paper in an email :
Each statement must include: (your refers to the contractor/employer)

• the name of your business and your employer tax reference
• either the date when the tax month in which you made the payment ended, or the date when you made the payment
• the subcontractor's name and UTR
• the subcontractor's verification reference number if the deduction was at the higher rate
• the gross amount before you made the deduction but after you'd taken off any VAT, CITB levy, materials costs and so on
• the cost of any materials you took off before making the deduction
• the amount you deducted

I have that statement info permanently set up on emails to our subbies and I just change the numbers each time.

The money deducted by any main contractor/employer is paid direct to HMRC on your behalf.
You need to keep good records and give the statements to your accountant at end of year.
The 20% amounts stopped will be deducted from your tax bill because it has already been paid by employer.
BUT if the main contractor/employer doesn't pay HMRC (goes in to liquidation for example) it is that statement that is your proof and keeps you from paying tax twice.

TBH we been working with CIS for years and it is not really a hassle once it is set up - although I'd rather submit no tax returns and pay no tax.


xx

 

[Mrs Tara Plumbi]

Agree with Tp,

As always! People will begin to talk!

when I chatted to the devil, ....

Ding the devil's work is not the same as being the devil.
In fact she died earlier this year ( you might not agree with me on that one!).

I'd say to anyone don't be afraid to phone and ask those nice people for help at HMRC. The people on the phones are very helpful. In fact most of them are (surprisingly) nice and helpful.

 

[lame plumber]

they can also be the bain of your lifr if you dont do it right as several builders down my way discovered in recent years, it would have been so much cheaper for them to have obeyed the rules first time round, as hmrc dont have to follow your paper trail they can estimate whats owed and you have to prove otherwise!!! Its the one case where your guilty until you prove your innocence