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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4090
Experience:  FCCA FCMA CGMA ACIS
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I am a sole trader in the construction industry. I pay cis

Customer Question

I am a sole trader in the construction industry. I pay cis at source and i have 2 employees. I work for main contractors and they deduct tax from me less cost of materials and vat. Can I allow in the deductions my employees wages as they are already paying PAYE.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Of course you can. Employees' wages are part of your cost of sales, but actually, in this case, they are not actually employees, but in reality sub-contractors. The amounts deductible are, of course, gross so you include both the sum you pay through CIS on their behalf and the net sum you pay to them also as part of your costs.
It really is a bit of a muddle and the CIS scheme was introduced as a measure to reduce tax avoidance which as you are probably aware was rife in the building [cash in hand sir, excellent!] industry.
I do hope I have managed to resolve your problem.
Customer: replied 2 years ago.

Keith

The 2 boys are employees of my company and they pay PAYE. I am the sub contractor and I pay them on the books.

Expert:  bigduckontax replied 2 years ago.
Oh, I see, sorry, I misunderstood. Yes, all their gross wages plus the employer's element of National Insurance you have to pay form part of your cost of sales.
The tax deducted from you under CIS you should post as a suspense item in your books which will eventually clear when you settle with HMRC at the end of each self assessment year.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.