Composite companies

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
Hello

Just wondered if anyone has got any subbies that get paid by a composite company.

I have got a subbie that has just started work through an agency and they have sent forms out to him asking if he would like to be paid CIS or composite. I have heard that any subbies that get paid through a composite company are asking for a tax investigation as this is seen as one form of tax avoidance.

Just wondered if anyone else had heard of this or is it just a vicious rumour.

By the way I went on the New CIS Scheme update last week and the deduction rate has increased from 18% to 20% from 6 April.


Charlotte

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    From what I understand they shouldn't be asking him which way he'd prefer to be paid - it's the 'engager's' responsibility to determine whether the worker is employed or self employed & treat them as such.

    I don't know whether working for a composite company would increase your chances of getting investigated - I think that the revenue is more concerned about the people operating the companies rather than those working for them. Again, it comes back to the responsibility being on the employer to get it right.

    Jodie
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    Thanks Jodie

    I am never sure how agencies operate and sometimes I'm not sure if they know, there input on this was well 'Its up to you'.

    Hopefully the changes for the new CIS scheme will make things a lot easier, well there is hope!!!


    Charlotte
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies


    I've never come accross 'composite companies' before. Can anyone elaborate?

    Helen
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    I'm sure there's many variations, but basically the worker gets shares in a company, then gets paid a low wage (I guess it would usually be minimum wage) as well as regular dividend payments (which of course saves a great deal of tax/NI).

    I'm sure someone else can elaborate on that!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    This might be of use.

    Tackling Managed Service Companies
    http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=164870

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies


    Thanks both.

    Dean - appreciate that link.

    Helen
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    I think that I remember that Gordon announced before Christmas that HMRC were going to look at composite companies.....

    Could just be my imagination though :roll:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    ooo claudia you've got over 1000 posts - i think that calls for a celebratory drink! :lol:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    Hi Jodie - my 1000th post was on Robert's "let's see how many posts everyone has got" :lol::lol:

    Quite apt I thought!

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies
    claudialowe wrote:
    I think that I remember that Gordon announced before Christmas that HMRC were going to look at composite companies.....

    Could just be my imagination though :roll:

    Claudia
    Not your imagination Claudia was true he said they had to be looked at to find thier true function.


    John
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies


    The link that Dean put further up on this topic, confirms.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    I couldn't access Dean's link due to it wanting me to register, but I found this instead with some very useful related articles;

    http://www.prosperity4.com/information/composite_companies/index.aspx

    God, there's so much I still have to learn! :cry:

    Regards,

    Robert
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies


    I had to register to access Dean's link. But it does look like an interesting site, so worth it.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    Oh go on then Helen, I have indeed registered.

    I did find a very useful article on there for the new CIS rules which explains quite a bit to a CIS ignoramus like myself! Since I haven't learnt any other CIS system it might actually be easier learning from scratch compared to others trying to transfer or adapt old knowledge?

    I'm also sure there are plenty of people who will offer me help or advice if I get stuck too! So thanks in advance to all those who I might be pestering for help in the near future!

    Robert
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies


    Is your company going to start using CIS workers from April?

    If you are completely new to CIS, does that mean you haven't any of the HMRC info that they have been sending? If not, you might want to request it and look at the website - in particular the verification section.

    Helen

    PS I hate sub-contractors (well, some of them - especially the rude one that shouted at me yesterday and called me 'dear' - he lived to regret that!)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Composite companies

    I've had the brief training session from our company accountants and received all the HMRC info, so I'm now in the process of finding out who our 'subbies' are. Thankfully, there aren't too many of them and they all seem to be CIS compliant anyway so I don't foresee too much of a problem...

    ...well, apart from failing to submit my nil returns seeing as I have a brain like a sieve at times!

    Robert

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