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A large part of our existing customer base is made up of self-employed sub-contractors working in the Construction Industry Scheme (CIS). CIS applies to construction workers who are self-employed and not employees subject to PAYE.
Up to 5th April 2007, CIS subcontractors either held a Subcontractors Tax Certificate (CIS 5 / CIS 6) or Registration Card (CIS 4). Those with Registration Cards (CIS 4) had 18% deducted from payments due in order to account for tax and NIC. Those with Subcontractors Tax Certificates (CIS 5 / CIS 6) were paid gross and therefore accounted for tax and NIC themselves.
At Redego Accountants we administer Redego Umbrella subcontractors under what was the old CIS 4 Card and offset the 20% tax (new rate from April 2007) deducted at source by the contractor against the tax payable by your the Limited Company. What this means for you is that once you receive your weekly or monthly payment (with payslip and SMS text message); there’s absolutely nothing else to worry about. We administer the invoicing (based on your signed timesheet), chase outstanding debts and manage all the taxation and accountancy obligations of your Limited Company. Due to the nature of work undertaken by CIS subcontractors, the Redego Umbrella service is the best and only method by which you will be paid.
Process for getting paid:-
- Work a week / month in accordance with your
contractors requirements
- At the end of the week / month, get your
timesheet signed by the contractor,
- FAX or email the signed timesheet and any expenses
you want to claim to Redego Accountants,
- We invoice the contractor from your Limited Company
(based on the hours worked),
- The contractor pays your Limited Company,
- We calculate your NET payment, transfer the £ to your personal bank account and issue you with a payslip and SMS text message.
It really is that simple...
Under the new CIS, from 6th April 2007 there are no registration cards or tax certificates - all of the old CIS vouchers have also been scrapped. When starting a new assignment, Redego subcontractors must give the contractor their name, unique taxpayer reference and Limited Company registration number (we will issue this to you). The contractor will have to contact HMRC to check whether to pay a subcontractor gross or net (holding either a 20% or 30% retainer). Redego Umbrella Companies will be paid net (20% retained) although this will have no impact on the way we account for your tax each week or month.
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A key part of the new CIS is that the contractor now has to make a monthly declaration that they have considered the employment status of their subcontractors and are satisfied that none of those currently working for them are actually ‘employees’. HMRC have decided to back this up with a penalty of up to £3,000 if contractors negligently or deliberately provide incorrect information.
When working under our Redego Umbrella service, we ensure that every contract you undertake correctly reflects your self employment status. Remember that employment status is not a matter of choice - the circumstances of the engagement determine whether you should be classed as an employee of the contractor. To this extent, agreements between your Limited Company and the contractor are strictly on a ‘business to business’ basis. Furthermore, the new CIS monthly return is applicable to individuals only and not Limited Companies. This provides the contractor with 100% assurance that he has engaged true self employed subies and not deemed employees.
For more information regarding the Construction Industry Scheme, including advice on how the new CIS will affect you, please feel free to contact our Customer Services Team on 01179 633 475.
Interested in finding out more? Please use the following links
for further evidence of why it pays to be with Redego. If you
still require more information, either visit our frequently
asked questions page, ask
a specific question via our online questions board or call
our Customer Services Team on 01179 633 475.
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