morning all,
anyone know what the score is with paying subcontractors? can i just pay them by cheque for their services or do i have to do everything via the cis route, ie take deductions out etc? (subby is another limited company by the way)
any feedback welcomed
Hmm. Bit of a "depends" question that one, is the fact of the matter.
Whether or not you have to go CIS (and as said subby must also be CIS registered), whether or not you with-hold the tax on account, or whether or not you pay 'em in full, really depends upon whether the work falls within the scope of the CIS or not. So that would be the first thing to check....
Here
The next part of it depends on whether they are a limited company (assuming the work is outwith the CIS scheme) - in which case, you pay their invoice, the VAT, the lot, in full - they are entirely responsible for their own tax position.
For non-limited businesses who are VAT registered, you may need to make deductions for Income tax, but you would still pay them the VAT on the FULL invoice - it is often easier if they are in this situation for you NOT to make deductions, and treat as per limited company.
For a guy who is working solely for you, and doesn't have any other customers (or only one or two), and mostly supplies just labour, take an accountants' advice because you may have to treat him as employed, for tax purposes.
All said and done, look at the CIS pages, and if your work falls in that scope, call in the accountant - it may well be a couple of hundred very well spent.
