[J.stokes]

Hi,
Hope you guys are all well in this difficult time. I would like some input on the following...
We are looking to sub contract out some work in the near future for cleaning of multiple bank branches.
However I am not sure on something.
If the client pays us and then we pay the subcontractor after taking our small commission.. does the whole amount paid by the client Initially to us count towards our taxable turnover or is it just the commission   amount  that would go towards our turnover ... thanks again and any input would be greatly appreciated ..

[George P]

The whole amount would go down as your turnover, then deduct payments made to sub contractors, eg
bank pays you £10.00 per clean, but you pay sub contractor £9.00 this would come down to expenses, that way, all recorded properly and you only pay tax on youre profit,

[J.stokes]

Thank you, what I was concerned about is , if I pay vat on the full amount but subcontract the work to someone not vat registered I’ll end up lying more in vat that profit made from the job ... thanks again

[Saima Jan]

Hi
Is any work available to subcontract? We would be glad to subcontract
https://www.bis-ltd.com/commercial-cleaning

Thanks
Saima

[GeorgeP]

Thank you, what I was concerned about is , if I pay vat on the full amount but subcontract the work to someone not vat registered I’ll end up lying more in vat that profit made from the job ... thanks again

You charge the customer VAT, it doesn't come out of your pocket directly, you collect it and VAT man

[DerekJohnston]

Not sure on how you are working that out. Based on the previous cost example.  If you charge  £10.00 plus vat per clean you are charging the customer £12.00 in total. If the sub contractor is paid £9.00 and is not vat registered you pay the vat man £2.00 less any vat able costs you have   you still have your £1.00 profit.
All income is calculated against you  taxable income.
The only other alternative is to register for the FLAT RATE VAT SCHEME. It is 16% for the cleaning industry
what that means that instead of deducting your expenditure VAT from your Income VAT  you pay a FLAT RATE of 16%
so instead of paying £2.00 to inland Revenue you ONLY PAY £1.60 . its not long in adding up if you have a turnover of a 1/4 £ Million. Your Accountant is the best person to calculate if you are better off on the flat rate scheme or not. it all depends how much of your expenditure  is vatable.