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The Construction Industry Scheme helps regulate the payments 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 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.

 

Construction Industry Scheme (CIS) Guide

What responsibilities do contractors have 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 need to verify new subcontractors with HMRC before any work can start, so that they can confirm:

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.

What do I need to 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
  • Their Unique Taxpayer Reference (UTR) number.
  • If they’re a sole trader: Their National Insurance number.
  • If they’re a company: The company name, and the company registration and UTR numbers.
  • If they’re a partnership: The name of the nominated partner, the partnership’s trading name, and 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.

Contractor accountancy services

Completing a monthly CIS return

Contractors 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’ll need to keep detailed financial records. 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.

If you don’t expect to pay any 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 either directly through their website, or by using CIS software.

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.

 

So, if you make a CIS return for the tax month 6th April to 5th May, the deadline to submit it will be the 19th May.

Do I need to give subcontractors a CIS statement?

You only need to give subcontractors a CIS statement if you make deductions from their pay. It’s good practice to issue a statement regardless though, so everything is transparent and they have the details they need for their own tax return.

It’s usually helpful for subcontractors to submit their Self Assessment tax return early on. This is because of the way that deductions are made, often resulting in tax overpayments. Submitting their return earlier means they get their tax refund sooner.

 

cis returns service

Making CIS payments to HMRC

Because contractors take CIS deductions from the payments they make to their subcontractors, it’s their responsibility to pay this money on to HMRC. Submitting CIS returns confirms to HMRC how much money you will pay.

There are three rates that contractors should use to make CIS deductions, which are then paid on to HMRC:

Our online accountants offer a range of services, including support for contractors. To talk to one of the team, call 020 33554047, or get an instant quote online.

About The Author

Beth-Anne Bruce

I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.

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