The compliance requirements of the Construction Industry Scheme (CIS) need to be dealt from all those working in the construction industry. At Adiva Accountants in London, we can assist you to comply with the requirements of the Scheme for your business in Bromley, Kent and London.
The Construction Industry Scheme (CIS) sets out special rules for tax for those working in the construction industry. The CIS applies to construction work and also jobs such as alterations, decorating, repairs and demolition. Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’. They may be self employed individuals, companies, or partnerships.
Contractors and subcontractors
Contractors can include construction companies and building firms, but also local authorities and government departments. Any business which operates in CIS and spends more than £1 million a year on construction is classed as a contractor. Subcontractors are those businesses that carry out work for contractors. Actually, many businesses act as both contractors and subcontractors.
Online monthly returns must be submitted to HMRC by contractors confirming the following:
- that the verification process has been correctly dealt with
- that the employment status of subcontractors has been considered
- payment details made to all subcontractors and
- any details of tax deductions made from those payments
The monthly return relates to each tax month (ie running from the 6th of one month to the 5th of the next). The deadline for return submission is 14 days after the end of the tax month. A Nil return should be submitted where a contractor has not made any payments to subcontractors in a tax month. This will avoid penalties that HMRC can issue for failure to make a return. Even if the contractors are entitled to pay their PAYE quarterly, still they must file their returns monthly.
When they enter into a contract, subcontractors must give contractors their name, unique taxpayer reference (UTR) and national insurance number (or company registration number). The contractor should be satisfied that the subcontractor is genuinely self-employed, then follow the ‘verification’ procedure explained below.
If you need help with the CIS monthly returns or for anything else in relation to CIS scheme, please contact us at Adiva Accountants in London and we will be happy to help.