CIS (Construction Industry Scheme)

What is CIS?

CIS is the Construction Industry Scheme designed by HMRC, under which a contractor deducts a percentage from the subcontractor’s income, and pays it to HMRC.

 

If you offer any of the following services, you fall under the rules and regulations of the Construction Industry Scheme.

  • preparing the site, eg laying foundations and providing access works

  • demolition and dismantling

  • building work

  • alterations, repairs and decorating

  • installing systems for heating, lighting, power, water and ventilation

  • cleaning the inside of buildings after construction work

 

Subcontractor

If the type of work you do is included in the above list, and you provide your services to a contractor, you have to register as a subcontractor to be paid with 20% tax deduction. This is an advance payment collected by HMRC towards your tax and NI Contributions.

 

To register as a subcontractor, have to be registered with HMRC as a self employed individual and have your NI Number and UTR number. The registration in CIS can be done over the phone and the effect is immediate.

If you start work and you have not registered as a subcontractor with HMRC, you will have 30% deducted from your income.

 

Contractor

If you have people working for you, as self employed individuals and the type of services you provide fall under the above categories, it is compulsory to register as a contractor. Failing to do so will result in inappropriate use of CIS scheme and will attract penalties.

 

To register as a contractor, you first need to be registered as an Employer.

Monthly, you will have to report all payments to subcontractors to HMRC via the CIS300 form and pay the 20% or 30% deducted from the subcontractors income, to HMRC.

 

Every subcontractor has be to verified in the CIS scheme before being paid. Upon verification, HMRC issues confirms if the subcontractor is to be paid with 20% or 30% deduction.

 

It is also your duty to ensure that the conditions in which the work is done, satisfies the contractor subcontractor relationship, rather than employer employee relationship. 

 

What can Priority Point do for you?

  • We can support subcontractors in recovering the CIS payments they are entitled to, via their Self Employment record with HMRC

  • For the Contractors, we can process the registration as an Employer, as well as a Contractor in CIS

  • We conduct the subcontractors verification in the CIS scheme, to enable you to make payments to them

  • We prepare, produce and file the monthly CIS300 report with the subcontractors’ payments

  • We produce the monthly CIS Payment and Deduction statement which you have a legal duty to provide to your subcontractors, as proof of the 20% or 30% deduction 

  • We keep you updated with the deadlines for submission and payments

  • We can act on your behalf with HMRC, via telephone or in writing

  • We have in depth experience and understanding of businesses trading in CIS as we are specialised in this sector