What is CIS?
The CIS sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry. Under the scheme, a contractor is regarded as a business who instructs another business, a subcontractor, to carry out construction work for them. The CIS covers most construction work to buildings and plant, including site preparation, decorating and refurbishment.
All payments made from a contractor to a subcontractor for construction work provided must take account of the subcontractor’s tax status as determined by HM Revenue & Customs ("HMRC"). This may require the contractor to make a deduction, which they then pay to HMRC, from that part of the payment that does not represent the cost of materials incurred by the subcontractor.
The deduction rates for the scheme are 20% for subcontractors registered with HMRC for payment under deduction and 30% for those not registered. Subcontractors who meet certain conditions imposed by HMRC are able to receive payments without deduction of tax.
There are severe implications for non-compliance with the construction industry scheme, including strict financial penalties and, in some circumstances, prosecution.
We relieve the burden of this from our clients with our outsourced CIS service.
Our CIS guidance and services comprise:
Advice on whether to register for the CIS
Registration with HMRC
Verification of new subcontractors with HMRC
Calculation and processing of monthly deductions from amounts payable to subcontractors
Payment to subcontractors gross or net of tax at 20% or 30%
Completion and delivery of monthly statement of deduction to subcontractors
Completion of monthly return to HMRC using official forms
Advice in connection with whether the subcontractor can be considered self-employed or not
If you feel you could benefit from CIS guidance and services and wish to find out more, please contact partner Alex Altmann at email@example.com