Under this, contractors deduct a money from subcontractor’s payments and pass it to the HM Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor’s tax and National Insurance. There are special rules for subcontractors working in construction Industry and how payments must be handles by contractors.
Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.
As a contractor, you are required to meet specific obligations under the scheme, including registering with HM Revenue and Customs (HMRC), checking whether your subcontractors are registered with HMRC, paying subcontractors, deducting tax and submitting monthly statements confirming these payments.
If you are a subcontractor, your main obligation is to register with HMRC. You must also keep HMRC informed of any changes to your business such as changes to your business address, business name, business partners and other relevant information.
At Martax, we can help you:
- Register you with HMRC as a contractor
- Verify your subcontractors with HMRC
- Supply deduction statements to the subcontractors
- Verify you with HMRC on behalf of your contractor
- Prepare your end of year self-assessment tax return and calculate your tax liability/ refund where applicable
For more information and to arrange a free consultation, please contact us.