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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15975
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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if i use a self employed person who does not have an UTR number

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if i use a self employed person who does not have an UTR number do i have to stop him 30% tax or not, my company is small but Ltd and VAT registered.


Are you registered with the Construction Industry Scheme (CIS)? Will the individual be working on a construction site? If you aren't involved in the construction industry, what business are you in?

Customer: replied 3 years ago.

OK so seems more conplex.

I use the self employed person on construction site and also private sites, i think im on CIS and have my own UTR number and my main lift company i test lifts for stop me 20% even though im vat registered and Ltd, this is ok with me as goes towards my corporation tax.

The individual will work on construction sites 70% of the time.

My business is a lift company which carries out testing and commissioning on elevators, as i said we are Ltd and Vat resigered, it i very hard to contact my accountant and get different views every time but that is for me to sort out so i need a firm answer.

The individual carries out his own books and submits them to someone to cleanse, but has no UTR number which is starting to worry me if im doing anything wrong.

I always pay him by company cheque but still feel if this is wrong it wont protect me, finanicaly im not good and my accountant never around but on lifts we excell, If it help my submitted invoices last year were around £120,000

can you confirm my 20% stopped on UTR is the cis


Leave this with me while I draft my answer. It will take a while.
Customer: replied 3 years ago.

ok just need it to be concrete as got him wanting his cheque, not getting it untill i now exactly what to do, thanks for your help.

I'm back.

As you suffer 20% tax deduction, your company must be registered with CIS. Otherwise, you would suffer a 30% tax deduction.

As for your self-employed individual, you should be doing something to protect yourself. In the old days, those who claimed to be self-employed in whatever industry had their names, addresses and NIC numbers taken and had basic rate tax deducted by sensible "employers". If HMRC did a PAYE audit and found some workers has been paid gross and the "employer" had no names and addresses, HMRC would make the "employer" liable for tax and NIC.

Before you pay somebody working within construction (see below for different trades) who isn't an employee, you are supposed to verify them with the HMRC section who manage the CIS. It should all be done online now with monthly returns. If you cannot verify somebody and you need their UTR and NI number to do that, you deduct 30% tax. It will then be up to the individual to get verified. He will need to be registered as self-employed.

There is comprehensive information on CIS here and here. See page 65 onwards in the second link. That will tell you whether your non-UTR man should be covered by CIS deductions or not as there are trades that are carried out on construction sites that are not covered by CIS. If he isn't, then so long as he provides you with an invoice with a name and address on it, you can pay him gross. It's not a good idea to do so with no paperwork.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

Thanks he now says he has a UTR number but thought it was a private afair for him, most of his work is in private homes painting decorating etc, how ever when he works with me we go to construction site, building sites, i put my company invoice in and pay 20% tax.

This must mean that im registered for cis, i get an annual list of all CIS payments which i give to accountant who then sorts my tax out for me.

So first question is do i deduct 20% through his UTR number etc and get him registered as a subby on my company.

Second question is if i go to a private site ie a block of flats where i have a service contract and i do a lift refurbishment which is not a building site and the indivual help me out for say ten days the managment company ( chartered surveyors ) pay me gross by cheque, so in this instance do i pay him gross, i hope you understand.

Please make it simple for me and thanks for your help

Let me take a look at that.
our subby has to register himself. He can do that here. He will have to call the CIS helpline.

You may find the list here useful in future. Specific guidance on work done by lift engineers can be found here. The installation of a lift in a new or old building is covered by the CIS and you should deduct tax from any payment to a sub-contractor who works on such an operation. Repairs and maintenance operations are not covered buy the CIS so if your sub-contractor works on that, you can pay him gross as does the building manager when they pay you.

If you have any query on whether an operation is covered by the CIS or not, then you should call the CIS helpline, the number for which is here. It can get busy but I've always found them helpful as CIS is all they do. They aren't general tax office workers.

Once your subby is registered with CIS, you can verify him before you pay him, instructions for which can be found here.
Customer: replied 3 years ago.

Ok well done this is good, if im working on a referbishment why do the chartered surveyors pay me gross, this will be the last question and have helped a lot with a upset subby saying i want my money, so now he can minus 30% until he sorts out his own tax affairs, im trying my hardest to do everything correctly and do not want any problems.

Thank Tony

I'm not sure why that would be the case. CIS is a complex areas and there are lots of fine lines and nuances. If I were you, I wouldn't worry about what a main contractor (the surveyor) decides to do as far as deducting tax or not is concerned. That's really not your problem and none of the contractors I've dealt with would complain at being paid gross. All you need to do is make sure you do it right.

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Thanks for accepting my answer.