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Contractors who are registered under the Construction Industry Scheme have specific rules which they have to follow and the CIS monthly return is just one aspect of those regulations laid out by HM Revenue & Customs.

The regulations include verification of subcontractors and recording all the payments and deductions made to subcontractors. A monthly return is kept which details all payments made to subcontractors, along with any deductions made. The monthly Construction Industry Scheme return is sent to HMRC. As a contractor, you must keep records of all payments and deductions made so that HMRC can check that the monthly return is being completed correctly.

Although it is possible to complete a paper version of a monthly CIS return, HMRC recommends that the return is filed electronically. This method is easier, faster and received by HMRC without delay. To file electronically, you can access the CIS Online Service which is provided by HMRC free of charge, use commercial software or access the Electronic Data Interchange. If you use the online method to submit monthly CIS returns, HMRC will no longer send paper returns.

When you initially register with the Construction Industry Scheme, you will be sent a contractor’s pack which will contain, amongst other items, a blank monthly return. Following registration with the scheme, a blank monthly return will be issued by HMRC just before the end of the tax month. A tax month commences on the 6th of one month and finishes on the 5th of the next month. The blank forms sent to you by HMRC will already be populated with information held by HMRC about your business, saving you time. As you complete the monthly contractor’s returns, HMRC will provide details of the subcontractors which you have used previously and subcontractors which you have verified.

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Any information which has been entered onto the monthly return by HMRC must be checked before completion of the form. If you have new subcontractors, add their information onto the form. The payments which have been made to every subcontractor have to be entered onto the form, entering the gross amount of payments made. Deductions will be added separately. Even if subcontractors are paid gross, they must still be included on the monthly return. Before signing the monthly return, read the declaration as it asks you to confirm that all subcontractors are self-employed rather than carrying out work under an employment contract and that all subcontractors have been verified if needed.

Each monthly return has to reach HMRC by the 19th of each month at the latest or you risk being charged a late filing penalty. You also have to be prepared for dealing with submission of monthly returns during the holiday period. Online submissions can be dealt with at any time as they will be received by HMRC immediately. However, a paper return may have to be sent in earlier to reach HMRC within the deadline.

A Construction Industry Scheme monthly return has to be filed each month, even if it is a nil return. A nil return states that no payments have been made to subcontractors during a particular month and this includes gross payments made. You can inform HMRC that you won’t be making any payments or deductions for a period of up to six months. However, you must submit the due monthly return on time to avoid a penalty being charged. Late monthly returns will incur a charge of £100 and further penalties if it is still not returned. Outsourcing to a payroll provider or other agent could save time and money, especially if you file your returns late.



About The Author

Kara Copple

An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.

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