CIS Deductions please help

RDAVIS

Hi can someone help make the CIS deduction clear for me, we are being challenged by a contractor who i believe has under paid.

Materials = £1806+VAT
Labour = £810+VAT

This is a new build housing development, so what is the CIS deduction amount please?

Abbiewilbraham

Hi R Davis,

It really depends on the Sub-Contractors (you!) deduction rate, the contractor will have verified you with HMRC and HMRC will then let them know the %. for your company. Do you know your % deduction?

It can be any of the following:-

The Construction Industry Scheme (CIS) deduction rates are:

20% for registered subcontractors
30% for unregistered subcontractors
0% if the subcontractor has ‘gross payment’ status - for example they don’t have deductions made

For example if your standard rate deduction is 20% the CIS deduction would be £162.00 (20% of £810.00), materials and VAT are not included in the calculation.

Hope this helps

Thanks
Abbie

RDAVIS

Thanks,

We are in the 20% bracket

Yes that does help as this is the figure I was expecting, however my next challenge with them is should they pay VAT on the labour or not as it is a new build development?

Abbiewilbraham

Most new builds are 0% VAT unfortunately! I would ask them for proof of this on letter headed paper just in case your ever inspected by HMRC. I feel your frustration because we are not told until our customers pay that the site was exempt from VAT, in most cases I have to re-invoice them as they have to have 0% shown on invoice for there records!

Thanks