Taxed twice having subbies?

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thebearbeef

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just a quick one i hope, in the coming weeks we're going to have a couple if gangs working through/for us on a job. We wont be making a fortune on them and it'll only be for 3 months max that they'll be working for us on this job with another hopefully following on closely. The game plan is to build things slowly and eventually have a couple of gangs going full time but while we're finding our feet i want to keep things as simple as possible.

My point/question is are there any ways to legally get around being taxed on the gross and then having to pay out on the subbies invoices again effectively wiping out what we'd make on them.

I know we'd claim it back at year end but i don't want a savings fund from it, our accountant said straight away to go ltd but that we wouldn't get gross payment status for min 12 months? Anyone else know if this really is the case or do we need to switch accountants? There must be a simpler way instead of incurring the hassle and expense of running a ltd company especially as its only really a trial run i guess?
 
No solution for you but I had the same problem with been taxed twice ,I had it balanced in other ways , I have heard of going ltd myself but never bothered.i used to run half invoices through the guy who works with me but he was too dumb to understand it and was always skint
 
That was a thought i had also to just split the invoices with my mate and pay people that way but it seems a messy way to do things esp when your trying to make a good go of getting things going properly
 
Wezly said:
If you want to make a good go of doing it properly, then start it properly. Take your accountants advice, there the experts.
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their the experts but what makes perfect accounting sense might not be the best option for us initially. It just seems drastic going from £35k a year sole traders to over night needing ltd and prob vat registration (along with the fees both things bring) there must be a sensible middle ground.
 
you can not run any business that is stopped 20% tax. your business plan is flawed . if you are not going to earn a decent amount of money from your subbies why bother?
 
Dansouthcoast84 said:
Is it different when a sole trader then?

As we deduct their tax when paying them and their tax gets offset our bill if that makes sense. So we arent phyisically paying it out
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Lost me there Dan, if I get £1000 less tax , I have £800. If I pay my guy £500 less tax he has £400 ,therefore I have £300 out of the initial £1000 ,
 
thebearbeef said:
So you let HMRC know that subby A) has already been taxed in your gross payment?
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If on domestic
say 1k job
you recieve 1k
subbie say 500quid is his invoice to you. You pay him 500 minus the tax.

Everymonth we do a cis return and hmrc knows how much tax youve paid. As in when a builder takes your tax. To how much youve stopped subbies tax.
but thats the ltd way
 
Dansouthcoast84 said:
If on domestic
say 1k job
you recieve 1k
subbie say 500quid is his invoice to you. You pay him 500 minus the tax.

Everymonth we do a cis return and hmrc knows how much tax youve paid. As in when a builder takes your tax. To how much youve stopped subbies tax.
but thats the ltd way
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My pal is ltd and he settles end of the year
 
Dansouthcoast84 said:
Yes mate.
You have to do a return each month but final bill or rebate is at end of tax year
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I do a monthly return but have to pay the tax by I think the 16th of each month, it is of no use to me been ltd as I might go and do a house for myself for six months or have an op and be off but it does lead to cash flow problems when I'm been double taxed and waiting for payments
 
Dansouthcoast84 said:
If on domestic
say 1k job
you recieve 1k
subbie say 500quid is his invoice to you. You pay him 500 minus the tax.

Everymonth we do a cis return and hmrc knows how much tax youve paid. As in when a builder takes your tax. To how much youve stopped subbies tax.
but thats the ltd way
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Yeah i get on a domestic job its not an issue as your paid full invoice but what i mean is that if doing a commercial job and you invoice a builder £1k but your subbie has invoiced you £500. Can you out of your £800 net then pay the subbie his £400 net but inform HMRC that your £200 deduction is to be offset against the subs £100 tax you had to deduct? Does that make sence? Or in that instance do you get £800 then pay £100 for his tax and £400 for his net leaving u only £300 net for yourself until end of year?

What im getting at is do you physically pay out his tax also despite it being included in your original cis deduction from a builder
 
johniosaif said:
I do a monthly return but have to pay the tax by I think the 16th of each month, it is of no use to me been ltd as I might go and do a house for myself for six months or have an op and be off but it does lead to cash flow problems when I'm been double taxed and waiting for payments
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This is my concern. I get the benefits of going ltd but at the times when we return to just being a 2 gang site bashing which is inevitable for a while, the added complications of being ltd seem a bit much
 
malc said:
you can not run any business that is stopped 20% tax. your business plan is flawed . if you are not going to earn a decent amount of money from your subbies why bother?
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My business plan isn't flawed its realistic for our situation. Theres a chance to earn a modest amount off subbies initially for very little input. If we make £20 a day on 5 lads thats £100 a day which is almost a wage, if were stopped their tax as well as paying it out then that margin is effectively a savings plan but i think when starting out trying to run lads its more flawed to think we'll make much more on them without chopping the rate to a level they wont return for. I'd rather make a little and give others a chance to make decent money and that way people are more likely to jump on the next job
 
I havent done it as a soletrader. But the cis scheme is set up so a contractor deducts tax from a subbie. So im.sure once year is up you declare what tax youve paid and deducted from subbies.

So yes deduct the 100 out of the 400.
 
if i remember correctly as soon as you have turned over 60k you can then apply to pay your tax at the end of the year instead of the 20% stoppage.
my son has worked a business plan out to have subbies and you need at a minimum of 12 plasterers for it to work financially.
 
Yeah im aware of that side of stuff i've just never really asked anyone about the actual logistics of paying the tax and managing your own deductions. Its pretty obvious we need a sit down with the accountant to see how we can make it work for us.
 
malc said:
if i remember correctly as soon as you have turned over 60k you can then apply to pay your tax at the end of the year instead of the 20% stoppage.
my son has worked a business plan out to have subbies and you need at a minimum of 12 plasterers for it to work financially.
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I'd bet that 90% of people that have subbies would disagree with that amount being needed. if one subbie makes you any profit for zero to little input then surely its worth it. But thats just my outlook i'll probably come back in 20 weeks and say i was wrong and its too much ball ache lol
 
Danny said:
Going Ltd was a no brainer for me.... it's not anymore work and a lot better financially :)
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It costs money to go limited, and you will pay your accountant more. You need to be making good money on your subbies to cover the additional costs of a bigger business and make a profit otherwise what's the point?
 
Danny said:
I dont like politicians. ..
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I love
Danny said:
It costs like £20 to set up and yes your accountant costs more but it's not much more.. well worth it :)
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Well this is a side issue for me. I've seen the sites you can set up for £18.99. Our accountant wants £125 + to do it for us. With it being a straight forward two man show theres nothing extra he can "sort" during the process is there?
 
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