A Contractors Guide to the Construction Industry Scheme (CIS)
As a contractor in the construction industry, it’s essential to know what your obligations are under the Construction Industry Scheme (CIS) to remain compliant with HMRC regulations and avoid costly penalties. Daniella Wardley, Client Manager explains what CIS is and what actions you need to take to comply.
What is CIS? If you pay subcontractors for construction work then you may have to deduct CIS tax from their invoices, which is declared and paid monthly to HMRC. These deductions count as advance payments towards the subcontractors’ yearly tax liability.
CIS obligations As a contractor what do I need to do?
1. Register as a contractor with HMRC before you engage your first subcontractor. You can do this by visiting What you must do as a Construction Industry Scheme (CIS) contractor: How to register - GOV.UK where you can also find a dedicated helpline for CIS questions.
CIS covers all construction work, with the exception of:
• architecture and surveying
2. Verify each subcontractor with HMRC at the point of engagement to determine their CIS status.
• scaffolding hire (with no labour)
•
carpet fitting
At the time a subcontractor is engaged, you will need to ‘verify’ them with HMRC. This will tell you:
• delivering materials
-- Whether they are registered under the CIS scheme
• work on construction sites that is clearly not construction, for example running a canteen or site facilities
-- What rate of deduction to use
This can be done via your HMRC login or by using CIS compatible software such as Xero.
Subcontractors that have not been included on a CIS Return for the last 2 years should be re-verified.
What details will I need from the subcontractor?
Limited company
Sole Trader
Partnership
Company name
UTR
Nominated partner name
UTR
NI number
Trading name
Registration number
Partnership UTR
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