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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 7105
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

I'm self employed and pay tax under the cis4 tax code. The

Customer Question

Hi I'm self employed and pay tax under the cis4 tax code. The contractor I work for is taking tax off the whole amount of the invoice and then making deductions on the net paid for materials I've purchased off them and the van I hire off them. Is this correct as tax should be taken off the profit which the materials and van hire are not.
Assistant: Are you filing as a sole proprietor or independent contractor?
Customer: I'm a sole contractor
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: No
Submitted: 6 months ago.
Category: Tax
Customer: replied 6 months ago.
Hi can you give me an estimate on how long it will be before I get my answer
Expert: replied 6 months ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Expert: replied 6 months ago.

Thank you for your question.

Please clarify for me

- Do you invoice your contractor for labour and materials or labour only.

- are you paying the contractor for materials bought and use of vehicle

Many thanks.

Customer: replied 6 months ago.
Hi yes I invoice for my labour and then before they deduct for materials bought off them and hire of their van they take the tax off the whole amount then they make their deductions.
Customer: replied 6 months ago.
Hi just to clarify I invoice for labour only. And ths answer to the second question is yes.
Customer: replied 6 months ago.
I am only supposed to pay the tax on labour which is the profit. Should they be invoicing me for materials and van hire.
Expert: replied 6 months ago.

Thank you for your reply.

You need invoices from the contractor for materials bought and van hire charges. These are your expenses.

When you prepare your accounts, you would reflect these costs and expenses against your income to reduce your profit for tax purposes.

You would be taxed on your profits and any tax deducted under CIS would go towards the tax payable and you would end up with a tax repayment.

My aim is to give you a professional service. I hope this is helpful and answers your question.

Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.

Expert: replied 6 months ago.

Hi there

Just checking to see if you need more clarification/information or have I answered your question.

Many thanks