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Sam
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An electrician has a certificate which allows him to get paid

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An electrician has a certificate which allows him to get paid GROSS under the CIS scheme .He is now to work as a limited Company for which he will be a director and shareholder.The question is can he use his personal GROSS certificate on behalf of the Company until the Company applies and gets it`s own certificate to be paid GROSS?

Hi

 

Thanks for your question

 

It probably will not surprise you to hear that the answer is no, the gross certificate is allocated to the work you undertake under a specific status, so current CIS certificate is for work as a sole trader only, ands you must wait for the outcome of the limited company application to see if gross status can be awarded there too. In the meantime you will have to suffer 20% tax deductions.


However, as a limited company you can offset the tax suffered against tax you have deducted and would usually pay over to HMRC (known as a set off)

 

Thanks


Sam

 

 

Customer: replied 3 years ago.


Thank you ,is there any requirements that the Company will have to fullfill in order for the gross status to be awarded.

HI

 

Yes there are three tests

 

Business Test

Compliance Test

Turnover test

 

These require the following

 

Business test

 

You'll need to show HMRC that your business:


  • carries out construction work - or provides labour for construction work -
    in the UK
  • is run largely through a bank account

 

Turnover test

 

HMRC will look at your business turnover from construction work for the 12
months before you apply for gross payment status. Ignoring VAT and the cost of
materials, your construction turnover must be at least:

 


  • £30,000 if you're a sole-trader
  • £30,000 for each partner in a partnership, or at least £200,000 for the
    whole partnership
  • £30,000 for each director of a company, or at least £200,000 for the whole
    company

Thanks


Sam

Customer: replied 3 years ago.


Will he be able to deduct any tax deducted at source from any Corporation Tax liability?

Hi

 

No - I am afraid only offsets from CIS tax suffered. (Not corporation tax or own self assessment tax)

 

Thanks

 

Sam

Customer: replied 3 years ago.


How will he then re-claim any excess CIS deducted at source?

Hi

 

Yes that is included in his CT return - but this is detailed with the calculation due for the period.

I thought you were asking whether it could be used against outstanding CT due. (so an immediate set off)

I do apologise

 

Thanks


Sam

 

 

Customer: replied 3 years ago.


Sorry ,there appears to be some confusion about my question.Assume that the Company has excess tax deducted at source than that deducted from it`s subcontractors!If he can`t offset this against the Companies CT liability ,how then will the Company physically receive these excess tax deducted at source?

Hi

 

As a limited company you would show the income earned through your CT return and then for the CIS suffered on that income either

1) can be set off against CIS collected and PAYE deductions made (so this reduces the payment paid over to HMRC each 19th of the month (and you would file a CIS return and a FPS under real time information AND show the CIS suffered so that HMRC knew what to expect from you as payment ) OR

2) Reclaim all or any excess at the year end

 

See link here and see under heading Reclaim CIS deductions taken from payments

http://www.hmrc.gov.uk/cis/sub/p35return.htm#5

 

 

 

Thanks

 

Sam

 

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