Limited company in the construction industry

Paisley

A partnership operates as both a contractor and a subcontractor in the construction industry. The partnership receives its payments gross and then deducts 20% tax before paying any subcontractors each month.

If the partnership were to end and a limited company formed instead, would the limited company be able to receive its payments gross from the start of trading and not net of 20%?

Any thoughts would be appreciated.

clegganator

Well, assuming it would still pass the gross payment test, it would just be a case of if HMRC would allow you to go straight onto gross payment status. If you can prove that it's a continuation of the trade and just a change of legal entity they should be OK with that. Having a good track record of making payments on time would help as well.

Monsoon

I'm with clegg on this one. I don't see why the company can't get gross status if the p'ship has it already.

But as you well know, CIS is not my forte

Paisley

Thanking you both.

I'm trying to find this out with HMRC now.