Presentation on theme: "An Introduction to New CIS Jan Hart Standard (Transition) May 2007 Revenue Advice Team."— Presentation transcript:
An Introduction to New CIS Jan Hart Standard (Transition) May 2007 Revenue Advice Team
Standard (Transition) May 2007 Out with the old…in with the new Old CIS Out with….. – cards or certificates – vouchers – Annual Return (CIS36) New CIS In with….. – verification – monthly returns – payment and deduction statement
Standard (Transition) May 2007 Setting the scene You are a contractor for a small building firm, trading by the name of Perkington Building Contractors. You have on your books four subcontractors who have worked for you within the last year. Two of them are paid gross and the other two are paid net.
Standard (Transition) May 2007 List of Subcontractors received from HMRC (Nov 06 & Mar 07) Q Why? A There is no need to verify the subcontractors on the March/April list. The November list gave you an early indication of the subcontractors who will not need verifying.
Standard (Transition) May 2007 Closing down old CIS Send in all vouchers to HMRC for any subcontractors paid up to and including 5 April 2007. Remember an end of year return is still due under old CIS, and you need to send your CIS36 to HMRC by 19 May 2007. Remember to include your CIS figures on your P35 and send to HMRC again by 19 May 2007.
Standard (Transition) May 2007 Start of New CIS 6 April 2007 Verification Monthly returns Statement of deduction Paying subcontractors Penalties Online services
Standard (Transition) May 2007 Engaging a New Worker Perkington Building Contractors have just won a tender and need to engage a new worker (Douglas Black), a sole trader who hasnt worked for you before. Q What do you need to do now?
Standard (Transition) May 2007 Check employment status QHow do we do that? A – Phone CIS Helpline on 0845 366 7899 – See Fact Sheet CIS349 – Use the ESI tool at www.hmrc.gov.uk/calcs/esi.htm
Standard (Transition) May 2007 Employment Status Indicator (ESI) The ESI tool will advise you whether someone is employed or self-employed in all but the most complex cases. You are not obliged to use ESI but you might find it useful, as you are responsible for ensuring the correct employment status of your workers. You can get a view of your workers status by using our website.
Standard (Transition) May 2007 7875A-PP 10 December 2006
Standard (Transition) May 2007 7875A-PP 11 December 2006
Standard (Transition) May 2007 7875A-PP 12 December 2006
Standard (Transition) May 2007 Verify subcontractor – why? To check that the subcontractor is registered for CIS and find out whether you should pay them gross or under deduction.
Standard (Transition) May 2007 Verify subcontractor – what details do you need? his name his Unique Taxpayer Reference (UTR) his National Insurance Number (NINO) if known plus your name, your UTR, your Accounts Office Reference and your Employer Reference. Douglas is a sole trader – you need
Standard (Transition) May 2007 Verify subcontractor – how do you do that? Telephone the CIS Helpline on 0845 366 7899, open 08.00–20.00 seven days a week. Internet at www.hmrc.gov.uk/new-cis Use third party software. Electronic Data Interchange (EDI).
Standard (Transition) May 2007 Verify subcontractor – what happens next? his name his Unique Taxpayer Reference (UTR) his National Insurance Number (NINO) plus your own details and you decide to phone the CIS Helpline. You have the following information about Douglas
Standard (Transition) May 2007 Verify subcontractor – what does the CIS Helpline do? Check that the subcontractor is registered for CIS. Tells you what rate of deduction to apply. Gives you verification number eg V0005432678.
Standard (Transition) May 2007 Another new worker Due to bad weather work has fallen behind and you need to take on another worker urgently. Douglas recommends Phillip White to you but the only information Phillip gives you is his name and that hes a sole trader.
Standard (Transition) May 2007 Confirmation of what you need to do Check employment status If self employed get subcontractor details Get your details Verify subcontractor Get rate of deduction
Standard (Transition) May 2007 Phone Helpline – Theres a problem Because Phillip has not given you his Unique Taxpayer Reference (UTR) or National Insurance Number HMRC are unable to trace a record for him.
Standard (Transition) May 2007 Decision…. You are told to make deductions at the higher rate. HMRC provide you with an unmatched verification number that looks like this V0000543267/A You MUST keep a record of this and include it on your monthly return and Phillips statement of deduction.
Standard (Transition) May 2007 Changes to payment status When a subcontractors payment status changes HMRC notifies the subcontractor of any changes. HMRC also notifies all contractors who verified or paid the subcontractor in the current or previous two tax years You apply the new rate as instructed in the notification HMRC gives subcontractors 90 days notice and contractors 30 days notice of a change in the subcontractors tax payment status
Standard (Transition) May 2007 Do you need to verify every subcontractor? they are on the list sent to you in March/April 07 or you have already included them on any monthly return in that tax year, or you have paid them since 6 April 2005 and when you last paid them you had seen a registration card or tax certificate which was valid until at least April 2007. If you are paying a subcontractor in the first tax year of new CIS you do not have to verify them if
Standard (Transition) May 2007 Paying Subcontractors For subcontractors who have deductions made at standard rate or higher rate you must provide a statement of deduction.
Standard (Transition) May 2007 Monthly return Its now 5 May 2007 and you receive your first monthly return pre-populated with details of your current and previous subcontractors. What do you do now?.....
Standard (Transition) May 2007 Decide how to make a monthly return You have a number of options on paper by post use HMRCs free online service at www.hmrc.gov.uk/new-cis use third party software or EDI
Standard (Transition) May 2007 What do you include on the monthly return? Details of all payments made to all subcontractors. Verification number if higher rate applied. Confirmation of employment status of all subcontractors. Confirmation that verification process has been applied. Your signature (if paper return).
Standard (Transition) May 2007 Completing your first monthly return NamePaymentsCost ofAmount deducted madematerialson account of tax Ahmed Khan1,000.00155.000.00 Adam Davies800.000.00160.00 Douglas Black600.000.00120.00 UTR 5678901234 Phillip White200.000.0060.00 Verification Number V0000543267/A
Standard (Transition) May 2007 Completed monthly return 567890123 4 6 0 0 0 1 2 0 0 0 DOU G BLACK LA S
Standard (Transition) May 2007 Completed monthly return 2 0 0 0 6 0 0 0 00005432 6 7 A PHILWHITE IP
Standard (Transition) May 2007 What do you do with the return? You must send your monthly return to reach HMRC by the 19 th of every month. For example, a return of all payments made to subcontractors between 6 April and 5 May must reach HMRC by 19 May.
Standard (Transition) May 2007 What do you do if youve not paid any subcontractors? –use HMRCs free online service at www.hmrc.gov.uk/new-cis –phone the CIS Helpline on 0845 366 7899 –use third party software or EDI –use the paper return. You must submit a nil return. There are four ways to do this
Standard (Transition) May 2007 Online Services Quality and accuracy Speed Safe and secure Convenient Savings To register visit www.hmrc.gov.uk Online demonstration available following this presentation.
Standard (Transition) May 2007 Paying HMRC All deductions made from subcontractors and included on the monthly return must reach HMRC by the 19 th of the month or 22 nd of the month if payment is sent electronically. For example, deductions made between 6 April and 5 May must reach HMRC by 19 May or 22 May if payment sent electronically.
Standard (Transition) May 2007 Penalties If you fail to submit a monthly return on time we will charge you a minimum penalty of £100. You may be charged penalties if your return is incomplete or incorrect. Plus, your gross status as a subcontractor may be at risk.
Standard (Transition) May 2007 Tax Treatment Qualification Test (TTQT) TTQT is applied when gross payment treatment is requested either at registration or on subsequent application There will be an automated test of a Subcontractors compliance over past twelve months. Failure to pass TTQT will result in non-allocation/removal of gross status. Test includes check on CIS, Employer and Self Assessment/Company obligations.
Standard (Transition) May 2007 Appeals You have the right of appeal against any penalty or decision against gross payment made by HMRC. The appeal should be in writing to your HMRC office. If the appeal cannot be resolved by your HMRC office it will be heard by the Appeal Commissioners who are independent of HMRC.
Standard (Transition) May 2007 Amending a Monthly return phone HMRC on the CIS Helpline number (0845 366 7899) with full details keep a record of the amendment(s) made keep a record of the date call made. If you make an error on your monthly return that has been sent to HMRC you should
Standard (Transition) May 2007 End of Year – April 08 If you are not an employer No end of year action needed. If you are an employer Add up all 12 monthly returns (remembering to include any amendments made) and enter total figure onto P35.
Standard (Transition) May 2007 Timeline Nov 061 st Subcontractor list Mar/April 072 nd Subcontractor list Mar/May 07 Close down old CIS April 07Start new CIS on 6 th April 07 onwardsRegister for CIS online May 07 1 st monthly return under New CIS and last CIS 36 for old CIS to reach HMRC by 19 May
Standard (Transition) May 2007 Further Help Checklist Online at www.hmrc.gov.uk/new-cis CIS Helpline number: 0845 366 7899 Business Support Teams HMRC publications
Standard (Transition) May 2007 Any Questions THANK YOU