The Construction Industry Scheme was brought in by HMRC to help minimize tax evasion within the UK construction industry and also to ensure subcontractors are protected from false employment. Under the scheme, registered contractors deduct money from the subcontractor’s payments. This then goes directly to HMRC as advance payment towards the subcontractor’s National Insurance and tax.
The Construction Industry Scheme (CIS) sets out special tax rules for subcontractors who work in the construction industry regarding how contractors handle payments, which often puts them in a difficult position if they aren’t aware of these specific obligations. Here at J&H Accountants we keep CIS contractors and sub-contractors happy with our efficient accounting and tax support services.
Helping you with CIS Tax
Whether you are a contractor or a subcontractor, we can help you and your business comply with the complex CIS tax rules.
We understand the scheme can seem complex and time-consuming for some small businesses, and that’s where we can help. We can save you time and hassle so you can focus on running and growing your business. Below are just some of the services we complete for our clients.
Services we provide for contractors:
- Verify your subcontractors with HMRC
- Ensure you pay your subcontractors correctly within the scheme
- Supply deduction statements to the subcontractors
- Keep your records in good order and supply HMRC with monthly returns
How Can We Help You?
We will ensure that you do not incur penalties by failing to submit your monthly returns to HMRC. J & H Accountants work with numerous contractors and are equipped to deal with your needs efficiently. By making sure we are always up to date with any changes to the CIS regulations we can notify our clients quickly of any changes that may affect them.
As a contractor, you are required to meet specific obligations under the scheme, including registering with HMRC, checking whether your subcontractors are registered with HMRC, paying subcontractors, deducting tax and submitting monthly statements confirming these payments.
If you are a subcontractor, your main obligation is to register with HMRC. You must also keep HMRC informed of any changes to your business such as changes to your business address, business name, business partners and other relevant information.
Services we provide for subcontractors:
- Determine your status as a subcontractor or employee, (or both) and register you with HMRC accordingly
- Verify you with HMRC on behalf of your contractor
- Manage and organise your business records
- Prepare your end of year self-assessment tax return and calculate your tax liability/ refund where applicable
Any contractor that you work for must determine whether or not you are to be treated as employed or self-employed for each and every contract. If you are an employee for the purpose of the contract, the contractor will need to operate a PAYE scheme whereby tax and National Insurance Contributions will be deducted from the payments made to you.
If you are self-employed, HMRC will register you as a sub-contractor under the CIS scheme and they will set you up to receive payments ‘under deduction’. This means contractors must make a deduction of tax at 20% (30% for unverified subcontractors) from the labour element of your invoices and pay it over to HMRC.
Whether you are the contractor or the sub-contractor, we can help you keep your CIS affairs in order. Contact us today for more information.
J & H Accountants
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We have extensive experience working with clients in the construction industry and can offer you the advice, guidance and continuous assistance you need to remain compliant.