Not always. The items below should be excluded when entering the gross amount of payment on the monthly return:
- VAT charged by the subcontractor (if the subcontractor is registered for VAT)
- any Construction Industry Training Board levy.
Furthermore, when working out the amount of payment from which the deduction should be made, the following items should be deducted from the gross amount of payment:
- what the subcontractor paid for materials including VAT paid (if the subcontractor is not registered for VAT). Plus consumable stores, fuel (except fuel for travelling) and plant hire used in the construction operations
- the cost of manufacture or prefabrication of materials used in the construction operations.
The gross amount of payment and the amount from which the deduction is made should include any travelling expenses (including fuel costs) and subsistence paid to the subcontractor.
The deadline for paying over the deductions
The deadline for the contractors to pay over all deductions made from subcontractors is by the 19th following the end of the tax month to which the deductions relate. The deadline would be 22nd, if payment is being made electronically, or the next earlier banking day when the 22nd is a weekend or holiday. Often the contractor is a company which operates as a subcontractor and has deductions made from its payments as a subcontractor. In these circumstances, the deductions made may be set against the company’s liabilities for PAYE, NI and any CIS deductions it is due to pay over.
A subcontractor will need to register for the CIS when first starts working in the construction industry on a self-employed basis. The registration is carried out by the subcontractor who needs to contact HMRC by phone or online.
If you need help with the registration of the subcontractors, or for anything else in relation to CIS scheme, please contact us at Adiva Accountants in London and we will be happy to help you.