UK CIS - materials Query

[M7 ATW]

Hi,

I’ve been trying to establish what is permitted in terms of materials and deducting these costs for the purpose of CIS,when a subcontractor has been engaged by ourselves and purchased the materials solely for that particular project.

we would reimburse the subcontractor for both labour and materials, therefore we have our own expenses in regards to materials, albeit through the contractor.

In this scenario can we deduct the same value of materials on our own invoice (for the purpose of CIS) as the costs we’ve incurred from the subcontractor?

Any advice would be welcomed as the scenario is on the HMRC doesn’t cover this type of scenario explicitly.

Many thanks, Matt

 

[Truemanbrown]

If you start off with the obvious, you are considering the costs of, for example, bricks, paving slabs, piping and fixings that a subcontractor may supply as part of a construction project.

It also includes the cost of renting or hiring equipment or scaffolding.

It does NOT the cost of using plant or equipment owned by the subcontractor, although consumables such as fuel used in running the plant or equipment can be claimed.

Also, remember that CIS deductions is limited to the direct cost of materials used or to be used in carrying out the construction operations. What the subcontractor must not do is to try to profit by increasing these costs by adding a mark-up or passing on a notional charge for plant or equipment they already own.

If they ever did a compliance check, HMRC would expect contractors to have robust systems in place to check the materials costs being paid. If HMRC were to carry out a compliance check and consider that the materials supplied have been overstated, they will look to the contractor for the additional CIS tax that is considered to have been under deducted.

 

[M7 ATW]

Thanks for your detailed reply, it’s appreciated.

but can I deduct the material costs on my invoice to the main contractor that a subcontractor has purchased but I’ve paid for when they’ve invoiced me?