Payroll Company Charging Me Vat On Own Workers

[Brianmcd6]

Hi I’m a VAT reg ltd company and using a payroll company to pay my self employed workers, there charging me 20% VAT Invoice the company I do bussiness with but cont understand why I’m paying all VAT I’m receiving to payroll, they said if I get +2000 and pay 1600 to them it’ll mean I pay taxman 400? Seems there just skimming my company’s VAT any thought please I’m in construction.

[fiction-factory]

Are you saying they are charging 20% VAT on the full weekly/monthly payroll? Or are they just adding 20% VAT to their payroll admin/service fee?

[Brianmcd6]

Hi I’ll send them excel spreadsheet of many hours and rates of guys working for me on a Monday, on Thursday they’d invoice me say 5000+vat 6000 and I’d pay them on Friday morning, there my accountant also so I’m unsure, as said before [phone] to them -400 tax man was there explanation to how VAT works

[fiction-factory]

Sorry, I'm struggling to follow that. What is the £5000 figure? Is that how much you pay your 'self employed' people. I think the fact that they are self employed may explain this. Do you avoid NI, holiday pay etc? What work do they do? Are they really self employed?

[Buenchico]

With many payroll companies the legal position is that the self-employed workers are contracted by the payroll company (rather than by the end employer) and the payroll company then provides those staff to the end employer.

Under such circumstances, VAT is payable on the FULL costs of the 'consideration' paid to the payroll company by the end employer.

See '2.3 Value' here:
https://www.gov.uk/government/publications/vat-notice-70034-staff/vat-notice-70034-staff

[Brianmcd6]

I’ll explain better, I have 10 guys working for me each one is self employed, I’ll pay payroll what there due, payroll then takes cis off them and pays them, for example 10 each making 500 a week I’ll pay 5000+vat to payroll, payroll deals with guys tax etc, each guy get payslip, I’m struggling why there taking 20%

[Brianmcd6]

Thanks for the link explains it, because of payroll are paying there employed by them, have you any advice on other ways to cut the middle man out

[fiction-factory]

Pay them yourself-set up your own payroll? I'm not sure how things work with staff who operate under CIS but if you pay them you'd have to pay employer's NI and maybe workplace pension.
You need an accountant

[Brianmcd6]

I’ve been looking into my own payroll, seem a lot to deal with as guys are self employed and come and go, so PAYE out the question, surly there’s away to not pay them the VAT it’s not like am paying them every quarterly, it’s on the same day

[Brianmcd6]

Any thoughts or experience with this ?

https://quickbooks.intuit.com/uk/cis/?cid=ppc_G_NB_Broad_CIS_BMM_+cis-+payroll_txt

[fiction-factory]

Get them to invoice you and then you pay the invoice?

[bednobs]

You seem to be rather confused as to whether these people are self employed or not. They don't appear to be from your brief description. What is the nature of the work?

[fiction-factory]

Just to clarify my 19:57 post, Brian- can you just ask the people who do work for you to invoice you. You pay them an agreed rate. They thens ort there own tax, NI etc out

[Brianmcd6]

Friction- that sounds possible I’ll be looking into it, thanks

[Brianmcd6]

Hi bednobs
Construction industry, civil to be precise,

[fiction-factory]

Ooops- just noted I typed the wrong 'there'.
Let us know what you decide to do

[Brianmcd6]

Much appreciate the help guys, I’ll be sure to let use know outcome