Construction Industry Scheme (cis)
deduction, giving each subcontractor’s name, reference number, payments made, deductions withheld, a declaration that the employment status has been considered for all subcontractors and that those needing to be verified have been. Nil returns are not required, however a contractor wishing to take advantage of this needs to inform HMRC first. A voluntary nil return can be made, where applicable. Late returns will incur penalties which changed from October 2011 (in many cases they will decrease) and the contractor’s own gross status, when acting as a subcontractor may be withdrawn. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS Deductions Where due, are to be made at the rate set by Treasury Order (see above) from payments made for labour, including travel and subsistence expenses, and should not be made against charges for supply of materials, consumable stores, fuel (except for travelling), plant hire, the cost of manufacture or prefabrication of materials used, VAT unless these have not been identified clearly on the sub-contractors invoice. Payments must reach HMRC as cleared funds monthly by the 22nd of the month following deduction for large employers and those paying electronically, or by 19th of the month in all other cases. Where a contractor’s average monthly deductions are less than £1,500, inclusive of all Income Tax, NICs and other PAYE liabilities, payments may, by arrangement with HMRC, be remitted quarterly. Where a subcontractor does not comply with some aspects of tax legislation in respect of other taxes, HMRC may remove any gross payment status. The contractor will be notified in writing of the change, which is to be applied to future invoices. Prior to April 2016 the compliance test was significantly more onerous. Penalties Failure to comply with the scheme in any material manner may well lead to the imposition of penalties by HMRC as indicated by the following table.
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