The Construction Industry Scheme (CIS) is a set of guidelines dictating how payments should be handled between contractors and sub-contractors. Based on a number of factors, the CIS sets out how construction companies and workers pay their taxes, along with who is responsible for the paperwork.
At EBS we help to remove the stress many contractors feel when facing the CIS requirements. CIS involves special rules for those in the construction industry and sets out how payments must be handled.
The Construction Industry Scheme (CIS) sets out the special tax rules for subcontractors who work in the construction industry and how payments must be handled by contractors.
As a contractor, you are required to meet specific obligations under the scheme, including registering with HMRC, checking whether your subcontractors are registered with HMRC, the way you pay subcontractors, deducting tax and submitting monthly statements that confirm these payments.
We regularly update all our contractor clients with the latest changes to the CIS requirements. Our familiarity with the scheme means that we can pass these changes on to you in the most understandable way and save you from having to research them for yourself.
If you are a subcontractor, your main obligation is to register with HMRC. You must also keep HMRC informed of any changes to your business, such as changes to your business address, business name, business partners and other similar information.
Areas we may help you with:
Determining your status as a subcontractor or employee, (or both,);
Registering you with HMRC accordingly;
Verifying you with HMRC on behalf of your contractor;
Managing and organising your business records;
Preparing your end-of-year self-assessment tax return; and
Calculating your tax liability/refund where applicable.
Any contractor you work for must determine whether you are to be treated as employed or self-employed for each and every contract. If you are an employee for the purpose of the contract, the contractor will need to operate a PAYE scheme where tax and National Insurance Contributions will be deducted from the payments made to you.
If you are self-employed, you will be registered with HMRC as a subcontractor under the CIS scheme and they will set you up to receive payments 'under deduction'. This means contractors must make a deduction of tax at 20% Basic Rate (or 30% for unverified subcontractors) from the labour and refunded expenses element of your invoices and pay it over to HMRC. You can also apply for a 0% rate under certain conditions and we can assist you in this process.
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