Simply put, the Construction Industry Scheme “CIS” helps regulate the payments that construction contractors make to subcontractors who carry out work for them. They must complete a CIS return each month, so that HMRC know who has been paid, and how much.
Who should register for CIS?
A contractor, architect or tradesperson who uses subcontractors to carry out construction work should register for the Construction Industry Scheme (CIS) with HMRC. Subcontractors might be self-employed individuals or a company, and should also register with HMRC under CIS.
What are your responsibilities under CIS?
Contractors are responsible for ensuring that the subcontractors they take on for construction work are verified with HMRC. It’s also their job to complete a CIS return each month, and to make CIS payments to HMRC.
Ensuring that subcontractors are verified with HMRC
Contractors technically need to verify new subcontractors with HMRC before any work can start, so that they can confirm:
- Whether or not the subcontractor is registered under the Construction Industry Scheme
- The subcontractor’s tax status
Contractors also have to verify subcontractors that they have used before if they haven’t been included in a monthly CIS return during the current or previous two tax years.
How do I verify a subcontractor with HMRC?
Our table below explains what information contractors will need to have available to verify a subcontractor with HMRC.
|Contractor Information||Subcontractor Information|
|• Your Unique Taxpayer Reference number|
• Your Employer Reference Number (ERN)
• The Accounts Office referenceontractor Information
•If they’re a company: The company name, and the company registration and UTR numbers
• If they’re a sole trader: Their National Insurance number
• If they’re a partnership: The name of the nominated partner, the partnership’s trading name, and UTR number
• Their Unique Taxpayer Reference (UTR) number
Providing the right information and confirming everything with HMRC helps make sure that contractors deduct the right amount when they pay their subcontractors. The contractor should also ensure that any subcontractors are self-employed, rather than an employee.
Once HMRC confirms the details they will provide information on how to make a payment, and give the contractor a verification reference number. HMRC’s CIS enquiries page has contact details to help you get this information.
Completing a monthly CIS return
Contractors must submit a CIS return each month to tell HMRC about any payments that they’ve made to subcontractors. Like with most things to do with HMRC, you must keep detailed financial records of these transactions. These should show the amount that you pay to subcontractors, as well as the details of any deductions that you make.
What if I don’t use a subcontractor one month?
If you don’t use any subcontractors in a month then you won’t need to submit a CIS return for that period. You’ll still need to let HMRC know why you’re not submitting a return for that month though. I.e. a nil return needs to be filed.
If you’re not going to employ or pay subcontractors for the next few months, you can ask HMRC to temporarily mark your account as inactive. This is known as an inactivity request, and lasts for 6 months.
How do I submit a CIS return?
You can submit your CIS return to HMRC directly through their own website or a piece of specialist CIS software or you can let Dead Simple Accounting do it for you.
What information is on a CIS return?
The details you provide on your CIS return show HMRC which subcontractors you have paid, as well as the amount of pay and any deductions. This helps makes sure that everyone pays the right amount of tax.
When do I need to submit my CIS return?
CIS returns must be submitted by the 19th of every month, with the details of the previous tax month’s activities. A tax month starts on the 6th of one month and ends on the 5th of the following month.
Get In Touch
We offer Dead Simple, straightforward CIS advice specifically tailored to Construction professionals & have lots of CIS contractors & CIS subcontractors as clients.
Don’t hesitate to get in touch today for all things tax & accounting