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Construction_Industry_Scheme

The Construction Industry Scheme (CIS) is a tax deduction scheme enforced by HMRC to protect construction workers from false employment and minimise tax evasion in the construction industry.

Construction Industry Scheme (CIS)

The Construction Industry Scheme (CIS) is a tax deduction scheme enforced by HMRC to protect construction workers from false employment and minimise tax evasion in the construction industry. It sets out the rules for how payments by contractors to subcontractors for construction work must be handled.

Non-compliance with CIS can lead to financial penalties and, in some situations, prosecution as well. Pointax Accountants will help relieve the burden of compliance with this scheme for both contractors and sub-contractors through our comprehensive CIS services. Our expert and high-qualified Oldham accountants provide you with all the guidance and services necessary to prevent potential penalties, so you can concentrate on what you do best.

Who Needs to Register For CIS?

Contractors and subcontractors both must register for the scheme before any construction work starts. This scheme does not apply to employees. However, some organisations or businesses whose core activity is not construction may also need to register with CIS. These are those businesses who annually spend more than £1 million on construction work over three years. For example, these businesses include property developers or housing associations.

This scheme is also applicable for some public bodies if they have had an average annual spend of £1 million or more on construction operations over three years.

CIS Obligations

  • If you are a contractor making payment to a subcontractor for construction work, then you need to consider the subcontractor’s tax status as determined by HM Revenue & Customs (HMRC).
  • This requires you to make deductions from their payment s and pay the money to HMRC. Deductions count as advance payment towards the subcontractor’s tax and National Insurance Bill.
  • The deduction rates for the scheme is 20% for subcontractors who are registered with HMRC and 30% for those not registered.
  • Subcontractors who meet certain conditions imposed by HMRC can receive payments without deduction of tax.
  • You also need to file monthly returns and keep accurate CIS records. Failing to do so will incur penalties and heavy fines.
  • Whenever there are any changes in your business, you need to inform about it to HMRC.
  • As a contractor, it is your responsibility to deduct the right amount of tax from your subcontractors, however, if you fail to correctly notify HMRC of your subcontractor payments then you may be faced with a fine of up to £3,000.

How Pointax Accountants Can Help

Understanding who needs to register for CIS and your obligations as a contractor or sub-contractor can be overwhelming and is subject to several conditions. Drawing on the expertise of our expert CIS advisers and accountant in Oldham, we will remove the CIS compliance burden off your shoulder. Our team offers expert advice on whether your business needs to register for CIS, verify new subcontractors, calculate and process monthly deductions as well as completion and delivery of the monthly statement of deduction to subcontractors.

We also help with CIS compliance and monthly submissions allowing you to concentrate on managing your business construction activities.

Get in touch with us today to know more about our services and how we can help you.