3. Make the relevant CIS deductions on subcontractor invoices.
If you have made no payments during the period, you are still required to submit a nil return. If you are not planning on making CIS deductions for the next 6 months, then you can inform HMRC to remove the need to file a nil return for this period.
When you verify a subcontractor HMRC will tell you which rate of deduction to use. There are 3 different rates:
-- 20% for registered subcontractors
5. Issue CIS payment and deduction statements to any subcontractors where CIS deductions have been made.
-- 30% for un-registered subcontractors
If any deductions are made in the month, then a CIS payment and deduction statement should be issued to the subcontractor by the 19th of each month.
-- 0% if the subcontractor has gross status
The CIS deduction percentage should be applied to the labour value of the invoice excluding VAT. If you are using CIS compatible software such as Xero, this can be set up to calculate automatically for you from the subcontractor details entered onto the system.
The template can be downloaded from the HMRC website or if using CIS compatible software, the statement can be automatically generated.
What happens if I don’t comply?
4. File monthly CIS returns and pay over any amounts due to HMRC.
• If you don’t file your monthly return on time – an automatic penalty of £100 will be issued, increasing to up to 100% of the CIS deductions due if it’s more than 12 months late.
CIS returns should be filed each month with HMRC - consisting of all payments made to subcontractors during the period
These should be made up to the 5th of each month and are due for filing by the 19th of each month.
• If you pay your CIS late – there’s a possible penalty of 1-9% of CIS due plus daily interest charges.
Any CIS deducted should be paid by the 22nd of each month
• If you fail to keep records for at least 3 years – there are fines of up to £3k.
If you already have employees, then you can make one payment each month which covers your liability for PAYE/NI and CIS.
• If you fail to verify a subcontractor, fail to make deductions or file an incorrect return – you could be held liable for any CIS deductions that should have been made, plus further penalties and interest charges. With our knowledge and experience of the construction sector we’re here to help with specialist, bespoke advice. Reach out to Daniella or one of the team on 0330 058 6559 or by emailing hello@scruttonbland.co.uk
They can be submitted either via your HMRC online account or on CIS compatible software, which links through to HMRC.
P R O P E R T Y A N D CONSTRUCTION | SCRUTTON BLAND | 1 1
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