CIS

We are very experienced in the Construction Industry Scheme CIS and we can tell you if you need to be registered for the scheme and how to register.

You need to know that if your business does any work connected to construction it is illegal to pay someone who is not a fully fledged employee without first obtaining permission from HM Revenue & Customs.

The definition of construction activities is widely drawn and so most businesses working in construction will be caught by CIS.  Broadly it will include any work in the construction of commercial or public sector buildings, private house construction, extensions or repairs in all these sectors.

So if you do work of this nature and hire someone to help you (for example an electrician) on a self employed or subcontract work basis you need to operate the CIS scheme.

A note of caution the CIS scheme should only be applied to subcontractors who can clearly demonstrate they are truly self-employed.  If this is not the case and HMRC investigations uncover you have paid employees this way to avoid tax and national insurance.  You could be in for a very large bill for the tax and national insurance so avoided plus interest and penalties.

It is illegal to pay someone holding themselves out as self-employed for construction related work without first checking with HM Revenue & Customs whether you are allowed to, this is called verification.  HMRC will tell you if you can and how much tax you should deduct, there are three rates;

• Gross( no tax deduction)
• Standard rate – 20%
• Higher rate – 30%

You will also need to register for the scheme if you are a subcontractor or you will find yourself being deducted 30% tax.  If you are in any doubt contact us immediately on 08455576786.

If it transpires that you need to be registered as a contractor for CIS you will need

• To verify every subcontractor you hire once every two years.
• Prepare a monthly return listing every subcontractor you have paid during the course of the month gross of tax and the tax you deducted.

You will be pleased to know we are every experienced in Construction Industry Scheme (CIS) so can take the burden of these verifications and time consuming monthly returns from you, tell you how much CIS tax you need to pay and when.  If you also have employees we will tie these payments into your monthly PAYE tax payments.

I you want to know in a little more detail the individual processes required we have laid them out for you below.

Registration

New subcontractors have to register with HMRC.  A registration can be made by calling into the local HMRC office, but if you are already registered as self employed with HMRC and know your unique tax reference (UTR) and National Insurance number you can register for CIS by phone or online.