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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I have a small company doing IT, turnover 7k. My wife and I

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I have a small company doing IT, turnover 7k. My wife and I are the only directors. I moved into property and renovated a house into 2 flats. I did not know about the CIS scheme and now HMRC are wanting 18k of me in taxes I should have claimed from subcontractors and fines. This was a genuine error on my part . The company has no assets and no money. I funded the purchase and renovation from directors loans which I repaid at the end of 2011 as all this hapend in 2011/2012 tax year.. As this is company debt am I personally liable
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.

Thanks question - I am Sam and I am one of the UK tax experts here on Just Answer. (And CIS is one of my specialisms with my own accountancy firm)
First I would argue (appeal) the fact that although you accept that the tax that should have been deducted through the CIS scheme, as each of the of the sub contractors have filed their own self assessment tax returns /2012 and have paid the taxes due, HMRC are in fact double taxing the same income ! And under the CIS compliance position, this is something they should have considered before automatically approaching you with this demand .
Furthermore if there is no tax due, then they can reduce the penalties, and also have the power to mitigate the penalties consideration of late CIS monthly returns.
You just have to hope that each of the subbies that worked has in fact filed their 2011/2013 self assessment and also paid any due taxes year too.
You should find that this reduces the position considerably, an then what us left over may well be manageable to make good.
Link here CIS manual detailing this legislation
http://www.hmrc.gov.uk/manuals/cisrmanual/CISR83050.htm
But to answer your question as to whether you could be held personally liable, yes - sadly is the answer - its a rarity that the directors would not be pursued element of an HMRC debt.
Let me know if you have any aspect you wish me to expand on
Thanks
Sam
Customer: replied 1 year ago.

Thanks answer. Under the CIS scheme if a company is registerd exempt would that do. If I get all the companies to write to me stating that they paid the tax would that suffice or do I need a copy of there accounts.

Part 2 of the revenue claim is that I sold one of the flats to my daughter at a reduced cost of 18k below a value which after much negotiation we hsve agreed. As she is my daughter they are saying that this is a benefit to me and want yo tax me. I am not sure if they are looking to say it is company profit and tax me at 20% or benefit in kind and tax me at 40%.

Thanks advice

Expert:  Sam replied 1 year ago.

Thanks response
No, you do not need to do anything you just need to appeal to HMRC on the basis that as the tax year was 2011/2012 - that you wish them to reduce the tax they seek from you on the basis that the subbies would have paid this over to HMRC already through their own tax position.
if you want to ask each of the workers whether they have cleared their tax position you can, but in fairness, this is their business and unless you have the kind of working relationship where you feel this would not be an inappropriate request to make, then by all means proceed, but HMRC would look into matters themselves to see if this condition had been met.
No they shouldnt charge a tax benefit to you, that's ridiculous, they should just use the correct market value and reassess the corporation tax (capital gains within the limited company) to reflect this.
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13699
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Thanks , I am pleqsed that you think it should be corparation tax.

The cmpany has no money and no assets, so how will HMRC go anout getting any money.

Expert:  Sam replied 1 year ago.

Thanks further response
The directors could be held responsible, as its due to undue care being taken that the situation has arisen (even though not deliberate)
Let me know if you need any further advise on this matter, but in the meantime it would be appreciated if you could rate the level of service I have provided, as this ensures that Just Answer, credit me time
Thanks
Sam
Customer: replied 1 year ago.

with regard to CIS does this apply to Ltd Companies as well as sole traders. They are even trying to tax me on my architects bill. I dont class him as a subcontractor.

regards

Andy

Expert:  Sam replied 1 year ago.
Andy
Thanks response
CIS applies to anyone that works within the remit of construction, and engages others to work .
But the architect (as long as only paid one off job of drawing up plans/drawings) is someone you could have paid gross (although again would have declared this income to HMRC and paid tax on it)
If he stayed under your employ/engagements duration of the project then he should have been employed under PAYE by you.
Let me know if you have any further questions but it would be appreciated if you could rate the level of service I have provided
Thanks
Sam

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