CIS – Construction Industry Scheme
Sub contractors must be registered with HRMC. ahead for figures will guide you through the new legislation and make sure that the monthly returns are made on time using the online facility.
The CIS scheme covers all businesses and concerns that work in the construction industry. These include companies, partnerships and self employed individuals including contractors and subcontractors and those acting as both contractors and subcontractors.
Once registered under the scheme all payments made to subcontractors must take account of the subcontractors tax status. The contractor may have to make a deduction from that part of the payment that does not represtent cost of materials.
The contractor must:
§ Calculate the deduction according to the status of the sub contractor
§ Make the deduction
§ Record details of the payment, materials and deduction
§ Make the net payment to the suboontractor
§ Complete and give a certificate/statement of deduction to the subcontractor
§ Make a payment of the tax deducted by 19th of the following month.
§ Complete a return to HMRC by the 19th of the month following.
This includes:
§ Details of the subcontractors UTR numbers.
§ Details of the payments made, tax taken and cost of materials
§ A declaration that the employment status of all sub contractors has been considered.
§ A declaration that all subcontractors who need to be verified have been done so.
If the deadline is missed there is an automatic penalty of £100