If you are a contractor or sub-contractor in the construction industry you must also register with the Construction Industry Scheme (CIS). If you are found to be paying people in the Construction Industry but you have not registered you can be fined up to £3,000. You can then be asked to pay over the tax you should have been deducting from your subcontractors out of your own pocket – so it is really important to register if this applies to your business.
As part of this scheme, your contractor will take tax from you before they pay you, a lot like PAYE. If you are a contractor you will also take tax from the sub-contractors that work for you. All Contractors must complete a monthly return, and any money deducted is sent to the HMRC on behalf of the sub-contractor.
For Limited Companies, any CIS deducted can be offset against CIS they have collected from their sub-contractors / PAYE that they owe the HMRC. If there is any tax left in credit at the end of the year, this can be offset against their Corporation Tax or VAT.
For Sole Traders or Partnerships any CIS tax taken from you can be deducted from the tax due on your Self-Assessment return, and you just need to pay the difference. If the tax to offset is more than you owe, you will get a refund.
By law all members of the scheme must keep records of all payments made, tax collected, materials costs deducted etc.
Sometime the amount of paperwork and tasks you need to complete can be overwhelming… but once registered and set up, it is a very straightforward process.
We offer the following services:
- Setup of CIS Payments for Contractors: If you have sub-contractors we can register you with the HMRC.
- Monthly Submissions of CIS: After setup we can submit your CIS returns, as well as calculating your sub-contractor’s payments and tax, and sending them CIS statements by email. We can then let you know what to pay, how and to whom.
- CIS Review and Restate: We can sort out past CIS payments, and restate previous month returns if errors have been made, as well as liaising with the HMRC as long as we are your agent.
For clients using any of our CIS services – we will be happy to explain the CIS process to you, and answer any CIS queries at any time during the service term.
We can liaise with the HMRC on your behalf if assigned as your agent. We can also advise you on other CIS and employment issues, such as moving from sub-contractors to employees.
Our rates are shown on the What We Charge page.
A new CIS VAT domestic reverse charge which will take effect from 1st October 2019. For more information see our Reverse Charge page.
CIS: Key Questions Answered
1. Who Must Register Under CIS??
Generally any sole trader, partnership or company involved in work on permanent buildings, temporary structures or civil engineering work or installation may have to register if they use sub-contractors
Typical work under the scheme includes site preparation, general construction – bricklaying, roofing, plastering etc, alterations and extensions, repairs and refurbishment, decorating, dismantling work & demolition.There are some grey areas however. For example, soft landscaping is not included in the scheme unless working on a new build, or for a developer as part of a property development project. To ensure you comply with the guidelines it is recommended that you ask for advice or contact the HMRC.
2. Deadlines and Penalties
For CIS the monthly periods are 6th to 5th of next month – i.e. 6th January – 5th February. Returns and payments are due monthly, within 14 days from the end of the tax month. For example, if you’re making a return to cover payments you made in the tax month from 6 May to 5 June, it must reach HMRC by 19 June.
Late returns will be penalised £100 each for companies with less than 50 sub-contractors.
If you are registered but have not used sub-contractors for a specific month, you must submit a nil return.
3. Gross Payment Status
You may be eligible as a business for ‘gross payment’ status, which means that deductions won’t be made from your payments, but in order to qualify, your business must pass several qualifying tests. For more information please contact us.