To ask if anyone can help me figure out my OH's tax situation?!

[taxnamechange]

I am clueless when it comes to complexities with tax and my OH is evasive.

We have been together for nearly 5 years, lived together for 2.

He is 'self employed' / sole trader but always works for the same large construction company.
He has tax deducted from his pay each 'payslip' from this company as well as NI contributions. I don't understand this because he is still required to submit a tax return each year, so is he on some sort of 'emergency tax code' or something 🤔 and how can this be if he is self employed?

He used to have an accountant who filed his tax returns. He hasn't been back to this accountant for years. Apparently he has been receiving fines from HMRC because he has not done his tax returns.

He refuses to go back to his old accountant because he doesn't want to pay them to sort the problem out.

He has NO receipts for his work costs at all.

He refuses to let me try and help in any way and shits down when I bring it up because he is so anxious about it. His head is thoroughly in the sand and I don't know what to do.

Does anybody know if there's a way to sort this if he has no receipts for several years?

*shuts down, not shit obviously!

So is he basically a contractor for the bigger firm?

You really need to encourage him to seek professional advice - its impossible for anyone on here to gauge the extent of the problem and what can be done.

Given its his personal tax returns and you don't mention that you're married I doubt anyone would be able to speak to you about his tax affairs.

There's not much you can do other than protect yourself financially and encourage him to confront the problem.

I suppose so!

I'm not qualified but just an employer. It is possible to be both employed and self-employed at the same time. It sounds like this is the case if tax and NI are being taken out of his pay check. Does he do any work outside of this main job? If he has done self employed work in the past, this is why he needs to do a tax return, even if he doesn't owe anything. To get fines for not submitting it when he probably has nothing to pay anyway is really frustrating!

Even many paye employees submit tax returns, usually if they are higher rate tax payers, have different income sources, may need to repay child benefit, have benefits in kind etc. Is he really se if he is paid by an umbrella company though - who determines when and where he works, does he get holiday and sick pay?

No he has never done any other work for any one else. This large company have people working for them who are 'self employed' yet my OH is getting tax deducted from his pay but also has to do a tax return.

He's a contractor. If he gets his head out if the sand and get a an accountant to sort this mess out, he will most likely find that hmrc owe him money and he will get a refund

I think your OH should just give HMRC a quick call and explain the situation to them. I've always found them to be really helpful.

No he gets no holiday or sick pay. This company are huge and established so they definitely won't be doing anything illegal. Many of their workers/subcontractors are driving around in vans that the workers pay monthly to use.

He says he has called them and they agreed not to fine him anymore til he sorts everything out. That was a year ago and he has done nothing.

He says "I owe them loads".

I am so confused.

If he has no receipts he can't claim tax allowance can he.

It sounds like CIS. Many construction companies use sub-contractors, these are not direct staff and as such do not get holiday or sick pay. They quite often get a company van to use.

They still get tax stopped each month. Not paye and national insurance though. It is called CIS and he should get issued with a payment certificate each month showing what has been deducted. This information should be used on his tax return.

Initially, if he is confused just ask the payroll department to clarify is he directly employed or a sub-contractor.

If he is having tax deducted by the company he's working for, he can put the figures (he should get a P60 from them each year) into the tax return - I'd recommend doing them online as it works it all out for you, although previous years may have to be filled in by hand.

It is not for you to sort out though. Did you know about this when you moved in with him?

It sounds like he is being paid under the construction industry scheme: www.gov.uk/what-is-the-construction-industry-scheme

I’m not familiar with the details but it means payments for his tax are being made so if he does most or all of his work for the same company he may not owe much at all. Please do get him to ring HMRC or go back to his accountant: it’s not something you can fix for him but it is something he can sort out. (Without receipts he might miss some expenses he could otherwise have got but can still do a tax return and get sorted and will get the benefit of his personal allowance etc which he might not have got so far).

Yep sounds like he is a sub contractor, CIS, very common among construction companies, he will only owe money back on his tax return every year if he owes over a certain amount, apart from that he should get a monthly and then yearly over view of his pay which he can submit as basic as that to get a rebate on what he has over paid tax throughout the year - he can submit receipts to claim for tools or travel or food or whatever but if he doesn't have them he doesn't have to submit them, he just doesn't get the tax back for them.

There's obviously some confusion here. If it's a construction company and he's a genuine sub contractor providing labour he should invoice the company and they should deduct 20 or 30% CIS tax depending on his verification status. No NI involved until he does his tax return.

If he's being paid via an umbrella company, he would technically be an employee I think? Not my area really.

Does he receive a P60? Workplace pension?

He needs to know if he's self employed or not!

The outstanding tax returns will not go away either. If he's a few years behind on those his fines will be well into the thousands.

No I didn't know about it.

Thank you for your help CIS sounds exactly what it must be.

How does he submit a self assessment with no receipts or proof of his costs, he often takes cash out and uses it to pay fuel etc. He is quite frankly a dumb ass.

I was about to post about CIS but newi beat me to it.Unlike most areas the construction industry has special rules on this so it is no wonder you are confused. www.gov.uk/what-is-the-construction-industry-scheme and www.pinsentmasons.com/out-law/guides/the-construction-industry-scheme

He may just be a bit late with tax returns (lots of people are) and had a file for delay but is still filing them. I suppose legally he has no obligation to tell you about his tax affairs but you could certainly ask him to show you what has arrive. Eg in my marriage I did both our tax returns and we both opened each other's post but not all couples, married or otherwise, are the same I suppose.

I think under CIS his tax is probably paid at source so I doubt there are many liabilties over and above that.

The second link above actually goes into more detail including:

What is the effect of CIS applying?

CIS requires the contractor to deduct tax at source on any payments it makes to the subcontractor. The rate at which tax will be deducted depends on the registration status of the subcontractor. The following three scenarios are possible:

if the subcontractor does not register, then the contractor must deduct tax at a rate of 30% from payments it makes to the subcontractor excluding VAT charged by the subcontractor and the cost of materials;
if the subcontractor does register, but does not qualify to receive gross payments, the contractor must deduct tax at a rate of 20% from payments – again, excluding VAT charged by the subcontractor and the cost of materials. Even if the subcontractor does not pass the qualifying tests to be entitled to gross payments, it would still be better for the subcontractor to register in order that tax is only deducted at 20% instead of 30%;
if the subcontractor registers to receive gross payments, the contractor will not deduct any amounts from the payments at all and tax is then later accounted for by the subcontractor on those payments on its annual tax return. This would be the most beneficial scenario for the subcontractor.

If tax is deducted, then a subcontractor which is a partnership or sole trader can treat this tax as income tax on profits. If the subcontractor is a company, the tax deducted can be treated as satisfying relevant liabilities which are amounts due to HMRC in respect of that company's obligations as an employer - for example, PAYE or National Insurance Contributions (NICs)."

In short he can't, if he hasn't kept any receipt for expenses then he can't claim the tax back for them, that's his own fault. He can still submit a basic tax return based on the claiming back what he has overpaid for the year in tax, or is he earns over an amount then he will owe tax based on those figures.

How many self assessment returns has he missed? Is he paid directly through the company he is subcontracted to? What do his payslips state? He could be under CIS scope or having the tax deducted at source under IR35 rules. No he cannot claim for anything he doesn't have back up for but he still needs to submit a return confirming the amounts earned and deducted each month.

Thanks for all your help.

I haven't got access to his wage slips so don't know what's on them unfortunately.

He has not done a tax return for at least 4 years.

If he's in the CIS scheme, the contractor should give him a statement or certificate of deduction for each tax month he gets paid in. Some of these look very like payslips. Crucially, they should all be dated the 5th of the month and contain his UTR as well as or instead of his NI number. They also should NOT have NI deductions.

UTR and tax deducted - it's a CIS statement.

NI number, tax and NI deducted - it's a payslip.

Obviously there are variations of the above but it should help you determine which it's more likely to be.

He is definitely self employed no P60 or work place pension. He must not be paying NI contributions just this tax deduction through CIS.

He's a fool for not doing his tax returns then, he's already prepaid the majority of his tax and NI liability through the CIS tax deductions. If not more. The vast majority of CIS clients I deal with are in a refund position by the end of the tax year.