[Finance] Self employed to receive 80% of income from the Gov’t too

[Bold Seagull]

Can anyone shed any light on this situation. My lad has been registered in CIS since June 2019. Has submitted 37 invoices to his company/contractor and paid weekly tax deductions. His company/contractor is not working. He will get a tax rebate by applying thru CIS/ HMRC portal at year end (few days away). BUT - will he be able to claim against a govt relief scheme? Construction Industry Scheme is HMRC driven, he’s registered, has paid tax and HMRC know his earnings

This might be helpful:
https://www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-self-employment-and-paying-tax#toc-construction-industry-scheme-cis-

I think CIS is just a vehicle for self employment, so covered under the self employment umbrella.

 

[LlcoolJ]

Read the [MENTION=21158]Weststander[/MENTION] links to the rossmartin website and realise it is really not that simple. The devil in the detail is that a sole director as the 1 person employee of their company may not be able to furlough themselves for the 80% of their PAYE because effectively no one would then be in charge of the business entity. Whether there is room to say your role as a director to deal with the administrative side of the limited company can be retained, while your role as the company sole employee can be furloughed isn't clear.

If HMRC don't want to show those legally following the tax rules that they shouldn't be, all they have to do is change the rules. Statements like yours above have been shown time and time again on this thread to be simply born out of at best misunderstanding, and at worse just ignorance.

Well said.

I'm a couple of those type of stupid comments from going completely postal.

Spending all day just trying to help people and you get this ignorance clouding the waters.

As people are doing the right thing and "social distancing" so they should also stop spreading misinformation when it comes to income/tax etc.

This is actually really important stuff right now so if you don't know what you're talking about then SHUT UP.

Well done on your restraint BS.

 

[LlcoolJ]

This might be helpful:
https://www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-self-employment-and-paying-tax#toc-construction-industry-scheme-cis-

I think CIS is just a vehicle for self employment, so covered under the self employment umbrella.

It is. It's just tax deducted at source on self employed income.

The issue is that he will not have done a tax return yet because he only became self employed in June.

As mentioned above, this situation still isn't clear as Gollum said yesterday that people in this situ won't qualify but the website today says they can apply.

 

[drew]

That's also my understanding. It's simply too complicated to try and record and manage which self-employed are doing what, as there will be anything from not working at all to unchanged, and trying to do this after the event would simply encourage people to lessen their declared incomes (as if such a thing would happen ).

So, in certain circumstances, some self-employed may continue to work full time and claim the 80% as long as they 'have lost trading/partnership trading profits due to COVID-19' . (I believe)

It is, in effect, no different to other times when your local tradesman does work for cash in hand which won't always then go through their books!!

 

[beorhthelm]

Read the [MENTION=21158]Weststander[/MENTION] links to the rossmartin website and realise it is really not that simple. The devil in the detail is that a sole director as the 1 person employee of their company may not be able to furlough themselves for the 80% of their PAYE because effectively no one would then be in charge of the business entity. Whether there is room to say your role as a director to deal with the administrative side of the limited company can be retained, while your role as the company sole employee can be furloughed isn't clear.

If HMRC want to show those legally following the long established tax rules that they shouldn't be, all they have to do is change the rules. Statements like yours above have been shown time and time again on this thread to be simply born out of at best misunderstanding, and at worse just ignorance.

despite their best efforts, HMRC dont actualy control tax law. my point is about the motivation, not whether its right. its apparent from the IR35 debacle that HMRC are more interested in pursuing action against perceived transgressions.

i did read the link site, i get the points about sole directors, realistically just how much time do sole directors spend on admin?

 

[drew]

No it isn't the same, from what I've seen.

Need to quantify this by saying that I've not read the full biff yet......

This might be the relevant line from the Gov website. It falls in the criteria of those that can apply :-

have lost trading/partnership trading profits due to COVID-19

From that I suppose you could lose 10% of your profits but still carry on working and get the full grant, which to me seems wrong.

 

[Silverhatch]

This might be helpful:
https://www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-self-employment-and-paying-tax#toc-construction-industry-scheme-cis-

I think CIS is just a vehicle for self employment, so covered under the self employment umbrella.

Thank you

 

[LlcoolJ]

This might be the relevant line from the Gov website. It falls in the criteria of those that can apply :-

have lost trading/partnership trading profits due to COVID-19

From that I suppose you could lose 10% of your profits but still carry on working and get the full grant, which to me seems wrong.

You can continue to run your business and put a claim in.

The likelihood of actually seeing any money any time soon is another matter.

 

[Bold Seagull]

despite their best efforts, HMRC dont actualy control tax law. my point is about the motivation, not whether its right. its apparent from the IR35 debacle that HMRC are more interested in pursuing action against perceived transgressions.

i did read the link site, i get the points about sole directors, realistically just how much time do sole directors spend on admin?

It wasn't about motivation though, you stated specifically that HMRC were intentionally excluding sole company directors because they wanted to show them they are tax efficient when they shouldn't be. That isn't you asking a question of whether it is right or wrong, you made a statement of why HMRC have done what they've done, you didn't even dress it up as your opinion. This demonising of thousands and thousands of 1 man limited company owners abiding by the laws of the land without any untoward avoidance or suspect practice is very emotive because the suggestion is they are all tax dodging. Would you say the same to anyone putting their estate as tenants in common to reduce their inheritance tax liability to their family? All perfectly legal and within established rules without any schemes or devious practice.

As for the admin, it's not so much time, it is that if a limited company is 'live', then there should be someone to man it. The reality is for many there won't be anything to do at all, however it is the concept of having an operational limited company with no one in charge.

 

[WATFORD zero]

It is, in effect, no different to other times when your local tradesman does work for cash in hand which won't always then go through their books!!

There is a significant difference in that your local tradesman (or driving instructor) can now put all this work through their books and as long as they can show that they 'have lost trading/partnership trading profits due to COVID-19', they can still claim the 80% in addition to any work they do. Of course, they would then have to pay tax on it

 

[trueblue]

Thing is now there is very little benefit if at all of working as a limited company purely as a tax exercise. I believe the biggest benefit, even more so now, is the limited liability. As long as directors haven't had to give personal guarantees you are not going to lose everything if your business goes down the pan.

Yes. A very good point. As every client I work for makes it pretty clear that if anything goes wrong, I'm very much on my own, this is an important consideration too.

I just wish the tax system would be changed to reflect real life working practices. It's the really massive companies that are manipulating the market to their ends - but it appears to HMRC are more obsessed with the self-employed who are just trying to make a living. For instance, they seem to think I can dictate every aspect of the terms on which I work. I try to where I can but push too hard and the solution's easy: they'll just give someone else the job. Genuinely, given the size of some of these corporations, it would be like me trying to tell McDonalds how to run their business.

 

[trueblue]

Yep. It's a real shame that some people, a lot of people, have zero idea about this stuff but still feel qualified to have a vocal and often offensive opinion.

Hope you get through this ok btw.

Cheers. As it goes, I fall into the category of 'self-employed for years and pessimistic' so I have money set aside that will see me through. In my case, it's more the grinding demonisation of the self-employed that's getting me down - and the fact that even after this, I know I'm going to have a fight on my hands to prove (on some ridiculous criteria) that I shouldn't be taxed the same as a 'proper' employee.

I'm also p***ed off on behalf of plenty of colleagues who haven't been able to build up that safety net and are royally shafted compared to many. One, for instance, is now carting boxes around in a Parcelforce warehouse just to put food on the table for his family.

Anyway, good health everyone. There are worse problems right now - but appreciate the discussion.

 

[razer]

Can anyone shed any light on this situation. My lad has been registered in CIS since June 2019. Has submitted 37 invoices to his company/contractor and paid weekly tax deductions. His company/contractor is not working. He will get a tax rebate by applying thru CIS/ HMRC portal at year end (few days away). BUT - will he be able to claim against a govt relief scheme? Construction Industry Scheme is HMRC driven, he’s registered, has paid tax and HMRC know his earnings

They will only know his earnings if the contractor has submitted their monthly CIS returns. Many contractors don't keep up their side of the bargain.

 

[trueblue]

i did read the link site, i get the points about sole directors, realistically just how much time do sole directors spend on admin?

On the admin front, probably a few days a month. Now there are other things to sort out too which are too time-consuming when I'm getting on with the nuts and bolts of my actual work. Things that could bring new revenue streams like a website and improving my home facilities to increase the range of jobs I can pitch for. Plus I'll be keeping closely in touch with existing clients, sniffing out opportunities to get back to paid work as quickly as possible.

I'm not going to be rushed off my feet - I accept that. But the business will still require some attention.

PS Sorry about the string of replies... never got the hang of that 'multi-quote' thing...

 

[beorhthelm]

It wasn't about motivation though, you stated specifically that HMRC were intentionally excluding sole company directors because they wanted to show them they are tax efficient when they shouldn't be. That isn't you asking a question of whether it is right or wrong, you made a statement of why HMRC have done what they've done, you didn't even dress it up as your opinion. This demonising of thousands and thousands of 1 man limited company owners abiding by the laws of the land without any untoward avoidance or suspect practice is very emotive because the suggestion is they are all tax dodging. Would you say the same to anyone putting their estate as tenants in common to reduce their inheritance tax liability to their family? All perfectly legal and within established rules without any schemes or devious practice.

As for the admin, it's not so much time, it is that if a limited company is 'live', then there should be someone to man it. The reality is for many there won't be anything to do at all, however it is the concept of having an operational limited company with no one in charge.

clearly is emotive, a lot of inference from such a small comment.

 

[trueblue]

clearly is emotive, a lot of inference from such a small comment.

It IS emotive because we spend half our lives with HMRC and the Government threatening us, even though we're only following their rules.

I know one guy who's been fighting an ir35 case for about 4 years now, refusing to pay the tax bill they foisted on him for back tax (well north of 100k), but otherwise fully co-operative and answering all their questions in detail. FOUR YEARS. The latest I heard they said they still can't make up their minds whether he was an 'employee' or not.

I'd suggest that if they can't build a rock solid case in 4 years, they really haven't got much of a case! But they're happy to leave the doubt hanging over people and drive them sometimes right to the brink.

 

[beorhthelm]

Yes. A very good point. As every client I work for makes it pretty clear that if anything goes wrong, I'm very much on my own, this is an important consideration too.

I just wish the tax system would be changed to reflect real life working practices. It's the really massive companies that are manipulating the market to their ends - but it appears to HMRC are more obsessed with the self-employed who are just trying to make a living. For instance, they seem to think I can dictate every aspect of the terms on which I work. I try to where I can but push too hard and the solution's easy: they'll just give someone else the job. Genuinely, given the size of some of these corporations, it would be like me trying to tell McDonalds how to run their business.

agree, HMRC do seem focused on this area, and not even for a lot of gain.

 

[Bold Seagull]

https://www.stephens-scown.co.uk/covid19/coronavirus-job-retention-scheme-key-questions-answered/

More info. that company directors may be able to administer their company while furloughing their PAYE salary.

Can Directors of a business furlough?

The guidance is silent on this but Ben Kerry from HMRC confirmed this morning that a director can do so provided they were paid via PAYE as at 28 Feb 2020. Company Directors can complete their statutory duties, even if furloughed. This is the only work allowed.

 

[Bold Seagull]

clearly is emotive, a lot of inference from such a small comment.

If you haven't re-read what you wrote maybe do so, because it is pretty clear what you stated, not much room for inference.

 

[LlcoolJ]

https://www.stephens-scown.co.uk/covid19/coronavirus-job-retention-scheme-key-questions-answered/

More info. that company directors may be able to administer their company while furloughing their PAYE salary.

Can Directors of a business furlough?

The guidance is silent on this but Ben Kerry from HMRC confirmed this morning that a director can do so provided they were paid via PAYE as at 28 Feb 2020. Company Directors can complete their statutory duties, even if furloughed. This is the only work allowed.

This is such a grey area though.

"Completing statutory duties" varies massively from one company to another.

And what if someone is desperately working on leads/contacts to try to get some work in for the next few months?

That's outside the spectrum of statutory duties but may well produce zero income.

This is such a ****ing mess.