Builder has invoices for CiS (+vat)

[tinselvestsparklepants]

We're having work done on house and so far so good. But I've just been sent an invoice for cIS + vat. Can the builder do this? I thought that this was the equivalent of income tax and was not something that the client pays, let alone pays vat on?

The CIS scheme requires any business that employs subcontractors to register as a contractor. They are then responsible for making appropriate deductions from the labour element of subcontractors when paying their invoices, and repaying HMRC the deductions. This applies to companies and large “employers” of building works but I’m not sure about individuals, a quick google search didn’t provide any clear answers.

Might be worth a call to HMRC to ask their opinion on it. But invoicing for CIS is a really odd one and I suspect incorrect. Especially plus VAT.

At the very least I would be asking your builders accounts dept what they are doing. Are they a small outfit or a large company?

Thank you. They are a small firm. I've called Hmrc and sounds like they can't do this. From all my interactions with them so far I think it's ignorance rather than shady business if they've got it wrong, but I want to fact check before I call them out in it!

Is the builder asking you to pay each subcontractor directly?

A principal contractor deducts CIS from each subcontractor. If the subcontractor is VAT registered their invoice will include VAT.

The client is not responsible for paying CIS.

If a subcontractor is invoicing you directly it will not include CIS.

Sounds like the builder doesn't have a clue.

are you paying them through your own business or as a residential client?

this is where the dependent falls in for CIS scope - if you are carrying out the work and paying the builder through a business then the work will fall under CIS scope and you'll need to be registered as a contractor.

If you're paying them privately for a job on your private home then no CIS is applicable

End clients don’t pay CIS

I'm a private individual and I'm paying the main builder, who should be paying his subcontractors. He's just sent me an invoice that just says CiS - there's an amount then there's the vat. This is why I'm questioning it. I'm going to ask his accountant to explain.....

His subcontractors should invoice him. He pays their invoice with a deduction for CIS.
CIS is then paid my him to hmrc.

His invoice to you should cover all his Labour and material costs. There is no logical reason to list cis.