CIS

Construction-R-DUnder the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC).

The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they are not registered.

Who counts as a contractor or subcontractor

Register as a contractor if either:

  • you pay subcontractors for construction work
  • your business does not do construction work but you spend an average of more than £1 million a year on construction in any 3-year period

Register as a subcontractor if you do construction work for a contractor.

Once a contractor has registered under the Construction Industry Scheme, they are required to comply with certain HMRC requirements.

As a contractor you are required to submit monthly returns for all sub contractors accounting for the tax deducted, these must be submitted on line by a set day each month.

In some cases your business may also have to submit returns showing the CIS that has been deducted from invoices you have raised.

For more information, contact  CAW Accountancy.