sub contractors

valentino46 Registered Posts: 124 πŸŽ† 🐘 πŸŽ†
Hi all,

ive had a friend ask me to complete his tax return for him as he is a self employed tarmac subby. He knew i am currently studying technician level but i have refused to do this for him as i am unsure if any mistakes are made (although he has very simple figures to analyse) what kind of risks there could be. However looking at the process involved he is taxed at source on his CIS vouchers, the guy does not really buy any materials but if he did are these just deducted from the net profit along with expenses or are they classed as cost of sales.

any advice would be greatly appreciated as its an avenue i would like to deal with at a later date.




  • valentino46
    valentino46 Registered Posts: 124 πŸŽ† 🐘 πŸŽ†
    woof woof
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    As a student member you are allowed to take on the work as long as you do not mention the AAT.

    You should still follow their rules which state you are not to take on work which you are not capable of doing. You would need to register with HMRC as an agent and also for MLR purposes as well.

    As a CIS subcontractor he will have very limited expenses usually a consisting of a small amount of:

    protective equip
    plus others occasionally

    CIS industry can be considered higher risk as potentially he should really be an employee?

    To cover yourself against errors you should have Professional Indemnity insurance. If you are not confident of doing the work then I would advise him of this. You could always help him with filling it out or just recommend he sees someone more experienced until you are so.

  • valentino46
    valentino46 Registered Posts: 124 πŸŽ† 🐘 πŸŽ†
    hi Burg,

    thank you for your reply, it was nice of him to ask me and hopefully he will consider me when im a full member. I downloaded some great info off the AAT website for PPI providers and all the necessaries for starting as a MIP which i hope to do in 12 months or so. I have had bread and butter experrience of sub contractors in the past working elsewhere but never really the end accounts, although it is becoming a lot clearer now i am half way through technician.

    CIS seems a big field to get clients from have you found this a good area to focus on?

  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    I don't tend to take on CIS subcontractors. I have just the one really who is a family member.
    I don't really take them on as they are slightly higher risk for investigations as often they want to claim more than I feel is justified.

    I have clients in many varying fields I just tend to avoid CIS subbies and businesses that are heavily cash based. Purely for risk purposes.

    If you feel you can minimise any risk and still be compliant then there is no reason not to. I just choose not to.

    To gain a practising license from the AAT you will need to demonstrate experience in the areas that you require licensing for. I.e. accounts production, VAT, personal tax, business tax, corporation tax, bookkeeping, payroll, etc.

    If you work in practice with an all round role then most of this will be covered from your work. However if you don't have an all round role or work in industry you may need to get some experience from somewhere.

  • Caspar
    Caspar Registered Posts: 12 Regular contributor ⭐ 😼 ⭐

    I think you should have a go at the work, and do you know any other AAT members, who could cast their eye over it for you?
    I find these kind of accounts quite quick to do, and are fairly straight forward, with there being so little paperwork to process.
    I usually create the P & L to show services then put materials under to create a COS, then apply any expenses he can legitimately claim, such as:

    Does he have any insurance that he can claim?

    Phone charges ( you would have to calculate an acceptable portion as not all is for business use).

    Mileage (sometimes they travel to B&Q for materials whilst on site for example)

    Did he have any work clothes purchases

    If so Did he have any work clothes cleaned professionally (you can't claim for home laundry but you can if they are so bulky they can only be cleaned professionally)

    Did he buy any stationery for work use

    If he bought any tools which you will be putting to the Balance Sheet, is there any depreciation. (Where you will then bring in AIA on the Self Assessment)?

    There is also any fee he will incur, from you doing the work.

    Most try to claim subsistence for their daily work, but this is not usually claimable as they are working at the same place every day. On occasion, depending on the level of allowable expenses, sub-contractors do receive tax refunds.

  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 πŸŽ† 🐘 πŸŽ†
    Work clothes


    Just to clarify. Work clothes are not an allowable expense unless they are protective clothing ie Hi-Vis jackets, hardhat, toe-tector boots etc.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624

    Just to clarify. Work clothes are not an allowable expense unless they are protective clothing ie Hi-Vis jackets, hardhat, toe-tector boots etc.

    Or uniform with a logo!
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 πŸŽ† 🐘 πŸŽ†
    Or uniform with a logo!

    Or really sexy shoes.

    No, wait....... :lol:
  • Rinske
    Rinske Registered Posts: 2,453
    If you start your own company and make a logo of sexy shoes, maybe you can count them as part of the uniform, as they are the logo? :lol:
  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    Almost half of my clients are CIS subcontractors or contractors, so if you need any more advice I am happy to help!
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