Sole trader registration query

PatsyC

I have a potential new client who has previously worked as a subcontractor with a couple of main contractors in the building trade, he is a painter & decorator. He has now decided to work for himself and wants to work directly with main contractors and also home-owners. He has asked if he needs to register as a sole trader. I don't think he does for the following reasons but I am unsure:-

1) As a sub-contractor who has previously worked for a Main Contractor I think he would have been registered with HMRC for CIS. He cannot remember doing this but he has given me a copy of a Monthly Sub-Contractor statement from a Contractor which shows a tax deduction of 20%. This indicates to me that he is registered for CIS and that he has been verified by HMRC otherwise the deduction would be at the higher rate.

2) Assuming then that he is registered and verified as a sub-contractor operating within the CIS scheme then in my mind he has already registered as self-employed and therefore does not to register again as a sole trader. He does complete an Annual Self assessment tax return.

It is a few years since I have dealt with sub-contractors so I want to make sure I am along the right track - am I correct in telling him he has already done everything he needs to or am I missing something? Any help greatly appreciated. Thank you.

MarieNoelle

Has he paid class 2 NIC?
If he is already in self assessment there is a good chance he has filled in the self employment section, so HMRC would be aware of his status.

PatsyC

Yes he has paid his Class 2 NIC previously by direct debit - this has changed now though hasn't it?

MarieNoelle

Yes it will now be collected through SA.
If he has paid class 2 NIC HMRC knows he is already a sole trader.

PatsyC

Great thank you, sometimes you just doubt yourself....

PatsyC

Just one further thought, he did mention possibly passing work on to other sub-contractors if he had too much work. If that scenario happened would he have to register himself as a Contractor within CIS and operate the system for each sub-contractor i.e verify their status, give them a monthly statement showing deductions and submit to HMRC?

MarieNoelle

I would have thought so.

PatsyC

Thank you for your help