Hello gan-ga,
It appears your summary is correct. A subcontractor under the CIS is
self-employed, meaning that the contractor doesn't have the legal
responsibilities of an employer (including not paying holiday pay or
sick pay).
Under the CIS scheme, though, subcontractors still pay tax in a
similar way to PAYE, *except* larger subcontractors, who can receive
gross payments without tax or National Insurance taken off (they must
then pay these themselves).
Smaller subcontractors must get a CIS card, which means that the
contractor will deduct tax and National Insurance on your behalf.
Larger contractors can get a Tax Certificate which allows them to
receive gross payments as mentioned above.
From what you've said it sounds like you're a smaller subcontractor.
The criteria for getting a Tax Certificate are:
1) That you have had a net turnover (after deductions for materials
etc) of £30,000 per year for three of the past four years;
2) That you are in a business that provides labour to carry out
construction work, you conduct your business primarily through a bank
account and you keep proper business records;
and
3) That you have kept all your tax affairs up-to-date during the three
years immediately before you apply for a Tax Certificate. (This means
you must have paid all your tax, including any PAYE and subcontractor
deductions, and submitted all tax returns on time. Simply bringing
your tax affairs up to date just before sending in your application
will not be enough.)
So it looks like you need a CIS Registration Card. You'll need to
write to your local Tax Office (which you can find from
http://www.inlandrevenue.gov.uk ) to request an application form for a
Registration Card CIS4. You can't download the form from the Internet
for various technical reasons.
The only information you'll need to provide will be your date of birth
and National Insurance number. You take your completed form to your
local Tax Office along with a recent passport-size photograph. You'll
need to take two proofs of identity, one which bears your photograph
and one which has your current address. You'll also need confirmation
of your National Insurance Number. If you can't produce your National
Insurance number then the Inland Revenue will give you a temporary CIS
card that's only valid for a year.
So now you've got your CIS card, which should take no more than 30
days to come through. The contractor will pay you, probably monthly,
and take tax and National Insurance off at source. They will handle
tax deductions for materials, plant hire, etc, and will deal with the
VAT issues for you if you're not registered for VAT. You, in return,
will have to give the contractor details of your costs for materials
etc. The contractor will give you a Tax Payment voucher for your
records every month.
At the end of the financial year you'll still need to file a
self-assessed tax return. But most of the tax issues should have been
taken care of by your contractor.
I hope this covers the information you're looking for. Most of it came
from the Inland Revenue's own "Detailed Guidance for Subcontractors":
http://www.inlandrevenue.gov.uk/cis/section3b.htm
There's a useful overview of the CIS scheme in this Inland Revenue
leaflet:
http://www.inlandrevenue.gov.uk/pdfs/ir14-15cis.pdf
If you think you may be eligible for a Tax Certificate, the
information in this leaflet should help you decide:
http://www.inlandrevenue.gov.uk/pdfs/ir40cis.pdf
Search terms used: uk cis "construction industry scheme"
Please don't rate this answer until you're completely satisfied with
it. If you feel I haven't answered your question fully, or if you
would like a particular point clarified, please post a question
clarification and I will do my best to clear up the problem.
Hope this helps.
jeeagle-ga |
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