CONSTRUCTION TAX. EASE BUILT IN.
The construction industry is an important one – it’s even had its own specialist tax scheme built for it. As a contractor, you need to register for the Construction Industry Scheme (CIS) and take 20% off all payments to subcontractors so this amount can be paid to HMRC. You’ll need to do this monthly and keep records to be compliant and avoid penalties.
On the plus side, contractors might find it helps with cashflow because you’re paying tax during the tax year too, rather than only at the end of it. And for subcontractors who register for the scheme, CIS helps them to be paid on time and can help reduce the amount of tax they have to pay. Win-win.
We have years of experience of working with the construction industry so we understand businesses like yours. We’re here to help you get to grips with CIS and register for it, plus we can help you manage CIS payments and submit your self-assessment tax return. So, you can concentrate on construction projects while we take care of keeping you fully compliant.
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QUESTIONS, QUESTIONS
- How do I register a company for CIS with HMRC?
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Complete the CIS305 form, which is on the HMRC website.
- What is HMRC CIS Verification?
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It’s a process that allows contractors to verify the identity of subcontractors before making payments to them. This is important to make sure that payments are made to genuine subcontractors and that tax is paid correctly.
- How can I verify a subcontractor’s identity?
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There are a few ways you could do this, including checking the subcontractor’s details against the HMRC Construction Industry Scheme (CIS) database, requesting a copy of the subcontractor’s CIS registration certificate or requesting a copy of the subcontractor’s self-assessment tax return.
- What happens if I don’t comply with CIS rules?
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If you’re required to register for CIS, then you have to. If you don’t follow the CIS rules, you may be liable for penalties and interest. You may also be liable for any tax that is not paid by the subcontractor.
- Do you need to declare materials to HMRC for CIS?
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No, CIS only applies to payments made for labour.
- How do you account for CIS in payroll?
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When you pay a subcontractor, you have to deduct 20% of the amount for tax. Instead of entering the full amount in the Trade Creditors ledger, enter the amount after the deduction in the CIS Tax Liability ledger. This will help you track how much you owe HMRC and make sure your balance sheet is accurate.
- Can I claim CIS payments back from HMRC?
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You can claim CIS payments back if you’ve overpaid by completing a self-assessment tax return and claiming the refund on your return. You’ll need to provide evidence of the payments that you made, such as invoices or receipts.
You can also claim CIS payments back if you’ve stopped working in the construction industry. To do this, you’ll need to complete form CIS40 and submit it to HMRC.