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14th July 2010: An open letter to the umbrella company which may have lost it's CIS gross status
With rumours abounding of an umbrella company having lost it's CIS gross status, it got me to thinking back to when we had to make do without our CIS5 card (the old gross status) back in 2006.
It wasn't for very long mind, when the new CIS revisions came in in 2007 we were first in line and got it without any trouble [Gabem wins back CIS 'Gross' payment status], but the time in between was a real challenge. Not in financial terms, because we've always been careful when it comes to money, but in terms of loss of client faith and the increased administration demands it was a serious blow. It's also just embarrassing.
I remember having to explain it to my agency contacts and that was a bad day. I was in invoicing at the time and the figure 0.995 is indelibly etched in my memory because if you had a contractor's gross figure, you could multiply that by 0.995 and it would give you the payment you should be expecting in the bank (less the 18% CIS tax and plus the 17.5% VAT on the original gross amount). It wasn't always that easy of course sometimes payment would come in randomly missing the VAT or randomly including the CIS or both. It was just a case of thinking quicker on your feet.
If it's not just rumour and the umbrella company in question has actually lost their gross status they sincerely have my sympathy. It is going to have radical repercussions on the way they do business, and they are going to have to learn to react quickly to this new (unpleasant) reality. The sooner you can get back to running things smoothly the better, for you and your customers. Take it from someone that went through it
It's not all bad though, if you get through it (and that is the tricky bit), as a company and as an individual you'll come out smarter and stronger than you were before. You'll be much better able to cope with whatever the contracting industry throws at you; whether it's changes in circumstances, dealing with HMRC (whom I believe we now have a working relationship that I think we can be proud of [Gabem Wins HMRC Expenses Dispensation]) or coping with sudden changes in legislation.
Just get through it and you'll see.
Best of luck to you.
Hugo
@GabemUmbrella
14/07/2010
