We’ve got the answers to all of your CIS related questions
What does the legislation say?
The legislation aimed at agencies says, amongst other things, that any sub-contractor who works via an intermediary (rather than working direct for the end user) and who is subject to (or the right of) supervision, direction or control by any person in how they do their job should have the remittance for that assignment treated as ’deemed employment income’ which will have to be paid via the PAYE system.
Does this apply to me?
Potentially – because you contract with EEBS (who is a contracting intermediary) to supply your services. The new IR35 regulations will apply if you have your own limited company, and the VAT Reverse Charge Scheme affects VAT registered sub-contractors. If you are VAT registered you will also need to sign a self-billing agreement.
What constitutes supervision, direction or control?
There is no specific definition of supervision, direction or control but HMRC have published guidance and examples to demonstrate when it would apply. In very basic terms, if anyone tells you how to do your job, when to do it without consultation, or has the right to do so, even if they do not exercise that right, then you are likely to be considered to be subject to control.
Will I still be self-employed if I am subject to control?
The fact that you are subject to control does not automatically mean that you cannot still be contracted as self-employed. However, as part of our review of your working arrangements, we will also check that you still meet the criteria to be classed as self- employed.
How will you decide if the services I provide are subject to (or the right of) supervision, direction or control by any person?
We will need to ask you and the labour user a series of questions to establish if you will be subject to control on the assignment that you are working on. We will establish your working arrangements on site and make our decision based on the information which is supplied. If we decide that there is no ‘control’ we will have to keep evidence of the information used in reaching that decision to supply to HMRC if requested.
Will I still be paid via the Construction Industry Scheme (CIS)?
If you are not subject to “control” in how you do your work and are paid income which is not subject to PAYE and Class 1 NIC, you still need to register for CIS as normal if the work falls within the construction industry and your remittance will be subject to CIS deductions.
If I am subject to control but still self-employed what difference will it make?
If you are subject to control on any self-employed assignment nothing will change except that we will deduct Income Tax and NICs from your payment. The deductions will show on your remittance advice. Payment made in this way is referred to as ‘deemed employment income’.
What about self-assessment?
If you normally complete a self-assessment, any amounts paid to you as ‘deemed employment income’ have to be shown as income from an employment on your self-assessment return.
If you receive any income for work which is not ‘deemed employment income’ you will need to declare these amounts as self-employed income.
If you do not normally complete a self-assessment, you will not need to register if you only receive earnings which are subject to PAYE and Class 1 NIC as all earnings will have been taxed. You will only need to register once you receive earnings which have not been taxed.
If I am employed or if I am subject to my remittance being treated as ‘Deemed Employment Income’ how will my pay differ from my current remittance?
If you work via the CIS on your current remittance, you will be paid subject to the appropriate deduction for CIS (either gross, 20% or 30% deduction) and will pay any additional tax, or receive a refund, at the end of the tax year.
‘Deemed employment income’ has to have Income Tax and Class 1 NICs deducted at source. This means that Income Tax and NICs will already have been deducted from the payment due to you before it is paid. This will be deducted rather than the CIS deduction.
What do I need to do now?
If you are contracted as self-employed, and there is a significant change in your working practices we will need to establish if you will be subject to control whilst doing the work. We will query this with the labour user. You may receive a form from us to fill in and, if you do, please complete and return it to us as quickly as possible. For any significant change of assignment or periodically (but not necessarily each job) we will write to you to ask you to identify any changes that may have occurred to your working practices.
How do I prove my right to work in the UK?
We must now have checks in place to prove you have the right to work in the United Kingdom, even if you are a UK citizen.
The Home Office Right to Work Checklist identifies numerous documents from three lists as being acceptable proof – but if the aforementioned John Smith (or indeed Vladimir) is a UK citizen then you just need to see and keep a copy of their passport or Birth certificate – that’s pretty much it for UK citizens.
If the individual has been granted the right to live and work here under the EUSS he will have a “share code” that you can use for confirmation.
What about public liability insurance?
Under EEBS Contract of Services it has always been a requirement (see clause 7) that subcontractors insure themselves with Public Liability Insurance. Consequently, you must provide proof that you have insurance in place. There are two options available to you:
Option 1) Obtain your own policy through the insurance market, and provide EEBS with a copy of your policy, or
Option 2) If proof of the above is not submitted then you will be covered by EEBS contingent Public Liability Insurance that covers EEBS own position, should legal liability exposure that could fall on EEBS Ltd arising from the negligence of a sub-contractor, (you) the sub-contractor will be covered by EEBS policy, with the cost of our cover being passed on to (you) the sub-contractor, at a rate of (currently) £4.00 a week.
Please note: Whilst EEBS policy provides you with £5m of cover, you need to be aware that there is a £250 excess on any claim that you make under this policy for which you are liable. We are aware that there are better value options available for sub-contractors, so feel free to browse the market place for the best options.
What other services do you Provide?
At EEBS we can also complete your self-assessment for you, and submit it to HMRC at a cost of just £99 + VAT.
Will I receive confirmation of my taxation status?
Yes. We will provide you with a statement which will set out our decision.
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