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CIS - CITB LEVY help please??

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  • 5 posts
  • # 113825

Hi all,

I wonder if anyone could help me out with the following questions:

Here goes.....

My Husband is a self employed, sole trader, subcontractor in the construction industry, I always do his accounts and have done for years.

He has subcontracted for the same firm for 29 years and for quite a few years now has had the CITB levy deducted @1.5% from his gross pay before income tax was deducted

EG: £1000 gross - (1.5%Levy)£15 = £985 - (20% tax)£197 = £788 net: therefore tax taken from the reduced gross(after levy deducted).

Recently they have been taken over by a new firm, they have changed their pay advice slips and they have been deducting the CITB levy from the gross amount as before but not using the reduced gross to calculate the income tax.

EG: £1000 gross -(20% tax)£200 = £ £800- (1.5%Levy)£15 = £785 net: therefore tax taken from the gross (before the CITB levy taken off)resulting in paying more tax.

 Surely this is wrong?? I'm pretty sure the levy should be taken from the gross and the tax calculated from the reduced gross (the way they used to do it) Is that correct?

 

The next thing I wanted to ask is about the new payslip itself:

They are deducting the levy but have not mentioned it anywhere!!

 Just looks like this:

 

EG: Gross:£1000 Tax:£200 Amount Paid: £785

 

It obviously doesn't  add up on the payslip! It's only because I know that they take CITB Levy at 1.5% that I can work out why the net doesn't equal the gross - tax but to anyone else they wouldn't know where they difference came from.

Again surely this can't be correct to make a deduction but not show what it's for?? Is it even legal??

 

lastly, The CITB Levy? from what I've managed to find out HMRC doesn't support the recoup of the Levy through subcontractors? I'm pretty sure my Husband shouldn't be paying it, He is not VAT registed and is Labour only.

 

Sorry for bombarding with so many questions at once but I want to make sure I have the correct Informaation before I go in with all guns blazing!

Thanks for taking the time to read my post, looking forward to learning more from your replies.



Edited at 19 Sep 2016 07:17 PM GMT

Edited at 19 Sep 2016 07:19 PM GMT

  • Member PM.Dip
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  • 779 posts
  • # 113827

Hi,

Will this help?

http://www.citb.co.uk/levy-grant/levy-simplification/


Marilyn


  • Associate
  • Practice Licence
  • 38 posts
  • # 113829

Hi,

From what I have found, I think that your husband's firm should not be charging a levy at all. Please look at the articles below.

http://www.taxation.co.uk/Articles/2014/02/04/319871/citb-levy-deduction-withdrawn-april

http://members.thefis.org/assets/Uploads/Passing-on-the-Levy.pdf

 

My husband has worked in the construction industry all his life and I know that despite all the safeguards, there are many unscrupulous contractors out there. I would also query the fact that your husband has worked for the same company for so many years? Unless he has also been working for others within the same year, in HMRC's eyes, he woud be deemed as an employee and not a sub-contractor. My husband's old firm eventually went into liquidation because they followed the rules and employed their staff rather than pretend that they were subbies. This caused their prices to be higher than other contractors who did not pay holiday pay etc....

Having worked for the same company for so long, I doubt if your husband will want to rock the boat but I would definitely get further advice from the CITB themselves and maybe HMRC as well?

The reason that the levy is not showing on his payslip is because it is not meant to be deducted.

 

Rant over! :-)

Good luck, let us know how you get on.

  • Affiliate
  • 5 posts
  • # 113830

Thankyou for your replies Smile

 

My husband subcontracts for other firms too so although he has worked for them for a long time, there has been breaks in between and often works for more than one in the same month, but as you said he is reluctant to rock the boat!

 

BUT, can't let them get away with incorrect tax calculations!!!!

 

I'm going to email them and point out the errors with the calculations and also point out that any deductions should be shown as to what they are for on the pay advice, Then ask them to correct the errors from the last 3 months or stop deducting CITB altogether.(with a Gentle reminder that HMRC doesn't support the recoup of the levy through subcontactors)

See what the reply comes back as!!!

 

Thanks for your help Ladies i'll let you know how I get on Cry

  • Affiliate
  • 5 posts
  • # 113979

Hi, just wanted to give an update to the ladies who replied to my post last month Smile

 

It's taken this long to get any kind of answers from the firm my Husband subcontracts for and HMRC!!!

As for the Firm they said they are aware that the payslips are wrong and should show full calculations and are working on it but the Tax is correct and that it was actually HMRC that changed the rules to deduct tax before the LEVY as they do not support it!!! (see below HMRC)

As for the deduction of the LEVY they avoided the question completely and after a few attenpts to get an answer they finally replied with " we are allowed to deduct the Levy if we have given notice and a signed agreement is in place that we are going to do so"

My Husband said he is always signing things on the site and they are usually pushed in front of him when he is most busy, so could have well signed something without realising, with that in mind and for fear of being put out of work, we decided to leave that as it was .

But that said, I did speak to the CITB and they said the same thing they are not supposed to deduct it but can get around it by getting them to sign an agreement, which most people will sign because they need the work!!!!

As for HMRC they were less than helpful to say the least, nearly everybody I spoke to said "this is a very Grey Area"

I asked about the rules of Dedcutions and they said "most deductions should be made before tax is calculated but HMRC dosen't support the deduction of the CITB levy". I Tried to get them to clarify what "HMRC Dosen't support the deduction of the CITB Levy"actually meant, but they couldn't really explain or answer if this was right or not!! just told me to ask CITB as they were in charge of the Levy.

So all in all we know that the deduction shouldn't be taken but unless we want to rock the boat, can't do anything about it!!

As for the tax, they think they are doing it right and I can't really get an answer from anywhere to prove otherwise so will have to bite the bullet and take it!!!

Will keep listening out incase I pickup any new info, just wanted to update you incase you were interested.

Thanks for your help last Month.

Best Regards

Cheryl

 

  • Associate
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  • 38 posts
  • # 113992

Thanks for the update, you must be so frustrated! This is a similar scenario to the 48 hour working week i.e if you want the job then you need to opt out, otherwise....

I suppose that your Husband will have to accept the levy until HMRC changes it from a guidline to a legality. Perhaps with MTD in the pipeline they might as it could mess up their figures?

Personally, I am glad that you have raised this, there are so many grey areas in what should be a black and white system - especially in the construction industry.

 

 

 

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