Should a Limited Company....?

Question

...working in the construction industry, still be deducted 20% tax when working as a contractor?

I am working on a site for another company, but I am the main contractor on that site - I have had 20% tax deducted from my payments...

Is this correct? I thought that as a Limited Company, they do not do this...

I am losing a large amount of money because of the tax that is being deducted... any advice would be welcomed.

Many Thanks

Answer 1

Limited status is not relevant for the new CIS scheme. In fact under the old scheme the only difference was in the evidence acceptable to obtain gross payment.

The important concept is that of contractor and subcontractor. A contractor must operate the CIS for all his subcontractors.

You are presumably working for someone who qualifies as a contractor and therefore you are a subcontractor. So, deductions are in order.

Can you not qualify for gross payments? Don't forget this is only a cash flow problem as the money deducted is held to your credit by HMRC.

Answer 2

Hi there. You will be deducted tax unless you have a CIS Voucher, not the subcontractor's version the contractors version.
You have to contact inland revenue, cis dept and speak to some one there they can arrange for you to obtain these vouchers.
I can't remember off the top of my head the code but it isn't the same as the subs voucher.
Hope that helps.

Answer 3

if your cashflow is in order, this is a good situation to be in as most of my clients always reclaim tax. This can also work for you especially if you are a small/medium sized business

but the most important thing is to remember to keep your cashflow consistent for example you should pay your suppliers as late as possible without them having to get ccj's or threaten to take you to court, and you should collect any monies owed to you as soon as possible.

Answer 4

Speak to your tax office.