Construction Industry Scheme Cis Help Guide Step By Step
HELP!!! CIS Guidance
BUILDERS, PLASTERERS, DECORATORS, PLUMBERS and the like whom are involved in the Construction Industry and that obtain the services of other subcontractors are required by HM Revenue & Customs to independently verify each subcontractor they use and submit them with payment information on monthly CIS300 contractors returns.
£100 penalties are being issued by HMRC for every monthly return that has not been submitted either by paper or online by the due date of the 19th of each month. This does include any return due for earlier periods that remain un-submitted. Even zero returns are required to be submitted as penalties will still apply.
CIS rules laid down by HM Revenue & Customs means those participants involved in CIS and especially for subcontractors who are entitled to receive gross payments from contractors must comply. If a subcontractor is also a contractor and their PAYE and CIS taxes are not up to date or CIS returns are filed late, they will lose the right to receive gross payment.
To help your CIS monthly returns run smoothly here is a step-by-step guide for you to follow:
Does the work you do fall within the scope of CIS?
This might seem an easy question to answer, but it can be quite complex as often work within the Construction Industry can mix into domesticated works thus falling outside of the CIS rules laid down by HMRC. If you are uncertain as to whether your work is specifically involved in the scheme, contact your local tax office for further advice.
Are you or your company registered to bring on subcontractors in to the business?
In bring on subcontractors into your business irrespective of whether you are a sole trader or limited company, your business must first register with HMRC. If a PAYE scheme is already in operation and for the first time subcontractors are to be used by your business, you are required to contact your local tax office to arrange a change in scheme type.
Is the Subcontractor actually a PAYE employee
This can often be a fine line for contracting businesses to tread as subcontractors paid through the CIS scheme can often seem a lot like employees from the outside looking in. Questions which you could ask yourself to make this decision are
Do they own their own tools?
Do they own their own van?
Do they have their own insurance?
Do they invoice you as a contractor for their work completed?
Is there a contractual agreement in place stating they are a subcontractor
If you are in any doubt contact your local Tax Office for further guidance
Do you have all the relevant details to verify subcontractors?
In order to verify a subcontractor they themselves must be registered for CIS. Only that particular person or company has the power to do this, not you as a contractor. To verify a registered sole trader you will require their full name, UTR number and NI number and for a company you'll need the company name, company number and UTR number. The CIS verification line number is
08453 667 899.
How do I know how much tax to stop each Subcontractor?
On verifying the subcontractor, you will be issued with a percentage of tax to stop from the subcontractor each time you pay them. This will be one of 3 possibilities 20% deduction, 30% deduction and zero or gross payment. A verification number will also be issued. From then onwards tax should be stopped at the specified rate only on labor elements of an invoice.
How do I reclaim CIS tax suffered back?
Contractors whom bring subcontractors into their businesses are often used as subcontractors themselves and so fall under the same principles. They are also then required to be registered for CIS as a subcontractor and must be verified. Stoppages made in this instance are only reclaimable through the submission of a P35 at the payroll year end 5th April each year for Limited companies. Sole traders and partnerships are required to record tax suffered through the self assessment route and are reclaimable after 31st January.
Offsetting cash you have been stopped as a business against the tax you are stopping from your subcontractors is a great way of assisting cash flow in your business, however this is a practice which must be prior arranged with your local tax office.
When should I pay the subcontractor tax over to the Inland Revenue?
Payments are required to be received by 19th monthly which relates to the period from 6th of the month to the 5th of the next. If no payment is due, the Inland Revenue is required to still be informed with again fines and penalties imposed if there are continual failings to do this.
If you have concerns regarding CIS and would like some professional advice contact scott@citylightspps.com or visit our website copying link http://www.citylightspps.com/cis_services.php into your web browser
BUILDERS, PLASTERERS, DECORATORS, PLUMBERS and the like whom are involved in the Construction Industry and that obtain the services of other subcontractors are required by HM Revenue & Customs to independently verify each subcontractor they use and submit them with payment information on monthly CIS300 contractors returns.
£100 penalties are being issued by HMRC for every monthly return that has not been submitted either by paper or online by the due date of the 19th of each month. This does include any return due for earlier periods that remain un-submitted. Even zero returns are required to be submitted as penalties will still apply.
CIS rules laid down by HM Revenue & Customs means those participants involved in CIS and especially for subcontractors who are entitled to receive gross payments from contractors must comply. If a subcontractor is also a contractor and their PAYE and CIS taxes are not up to date or CIS returns are filed late, they will lose the right to receive gross payment.
To help your CIS monthly returns run smoothly here is a step-by-step guide for you to follow:
Does the work you do fall within the scope of CIS?
This might seem an easy question to answer, but it can be quite complex as often work within the Construction Industry can mix into domesticated works thus falling outside of the CIS rules laid down by HMRC. If you are uncertain as to whether your work is specifically involved in the scheme, contact your local tax office for further advice.
Are you or your company registered to bring on subcontractors in to the business?
In bring on subcontractors into your business irrespective of whether you are a sole trader or limited company, your business must first register with HMRC. If a PAYE scheme is already in operation and for the first time subcontractors are to be used by your business, you are required to contact your local tax office to arrange a change in scheme type.
Is the Subcontractor actually a PAYE employee
This can often be a fine line for contracting businesses to tread as subcontractors paid through the CIS scheme can often seem a lot like employees from the outside looking in. Questions which you could ask yourself to make this decision are
Do they own their own tools?
Do they own their own van?
Do they have their own insurance?
Do they invoice you as a contractor for their work completed?
Is there a contractual agreement in place stating they are a subcontractor
If you are in any doubt contact your local Tax Office for further guidance
Do you have all the relevant details to verify subcontractors?
In order to verify a subcontractor they themselves must be registered for CIS. Only that particular person or company has the power to do this, not you as a contractor. To verify a registered sole trader you will require their full name, UTR number and NI number and for a company you'll need the company name, company number and UTR number. The CIS verification line number is
08453 667 899.
How do I know how much tax to stop each Subcontractor?
On verifying the subcontractor, you will be issued with a percentage of tax to stop from the subcontractor each time you pay them. This will be one of 3 possibilities 20% deduction, 30% deduction and zero or gross payment. A verification number will also be issued. From then onwards tax should be stopped at the specified rate only on labor elements of an invoice.
How do I reclaim CIS tax suffered back?
Contractors whom bring subcontractors into their businesses are often used as subcontractors themselves and so fall under the same principles. They are also then required to be registered for CIS as a subcontractor and must be verified. Stoppages made in this instance are only reclaimable through the submission of a P35 at the payroll year end 5th April each year for Limited companies. Sole traders and partnerships are required to record tax suffered through the self assessment route and are reclaimable after 31st January.
Offsetting cash you have been stopped as a business against the tax you are stopping from your subcontractors is a great way of assisting cash flow in your business, however this is a practice which must be prior arranged with your local tax office.
When should I pay the subcontractor tax over to the Inland Revenue?
Payments are required to be received by 19th monthly which relates to the period from 6th of the month to the 5th of the next. If no payment is due, the Inland Revenue is required to still be informed with again fines and penalties imposed if there are continual failings to do this.
If you have concerns regarding CIS and would like some professional advice contact scott@citylightspps.com or visit our website copying link http://www.citylightspps.com/cis_services.php into your web browser
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