Construction Industry Scheme (CIS) Monthly Return for Construction

Wednesday June 13, 2018

Before a new Sub-contractor starts working with you, you need to check with HM Revenue and Customs (HMRC) that your subcontractors are registered with CIS, and they will need to be ‘verified’.

THIS MUST BE COMPLETED BEFORE YOU CAN PAY A NEW SUBCONTRACTOR.

Next steps:

Log into the free HMRC CIS online service. (If you don’t have these details, please advise us)

You will need your subcontractor to provide you with the following information in order for you to verify them:

  •          Unique Tax Reference  (UTR)
  •          National Insurance number if they’re a sole trader (you can’t verify temporary numbers, which start with ‘TN’ or 2 digits).
  •          company name, company UTR and registration number if they’re a limited company
  •          nominated partner details, trading name and partnership UTR if they’re a partnership

HMRC will then tell you:

  •          whether the subcontractor has registered for CIS
  •          what rate of deduction to use or if you can pay them without making deductions

(You must also verify any subcontractors you’ve used before if you haven’t included them in the current or previous 2 tax years).

Making deductions and paying subcontractors

Once HMRC have confirmed all the details they will advise you of;

  •          A verification number
  •          What rate to deduct from payments.

PLEASE ADVISE RIFT ACCOUNTING OF THE VERIFICATION NUMBER AND RATE OF DEDUCTIONS.

The CIS deduction rates are:

  •          20% for registered subcontractors
  •          30% for unregistered subcontractors
  •          0% if the subcontractor has gross payment status 

When you pay subcontractors, you will need to make deductions from their payments and pay the money to HMRC. Deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.

How to make a CIS deduction

CIS deductions are only applied to labour costs.

Deduct the CIS percentage rate (as given to you by HMRC) from the amount..

If you are unsure about any of this, please talk to RIFT Accounting

Paying subcontractors.

When you make deductions, you must give the subcontractor a ‘payment and deduction statement’ within 14 days of the end of each tax month. This is available in Clearbooks, please ask the team at RIFT to show you where to find this.

Pay deductions to HMRC

You must pay HMRC any deductions you’ve made.

When and how to pay

Pay HMRC every month by the 22nd (or the 19th if you’re paying by post). You will be charged interest if you pay late. You will be charged a fine if you submit the return late, even if you have paid the bill!

As always, any questions, please feel free to ask, and we will be happy to help.

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