If you are a Sub-Contractor or a Contractor in the Construction Industry, or you do any construction-related work, then it may be necessary to register with HM Revenue and Customs for the Construction Industry Scheme. Failure to comply can result in considerable problems with HMRC as well as potential penalties being imposed.
The Construction Industry Scheme (CIS) has been designed by HM Revenue and Customs to ensure that those working within the construction industry pay tax on their earnings and regulates the manner in which sub-contractors are paid. CIS applies to all contractors and subcontractors working in the construction industry regardless of the structure of your business, it applies to sole traders, partnerships and companies alike though the way they are treated under this scheme can be different. In addition, certain other businesses and organisations that are not primarily involved in the construction industry may also find that they must comply with CIS rules.
Contractors are responsible for verifying the way in which a subcontractor is paid. The subcontractor could be paid on a gross payment basis, 20% standard rate deduction or 30% higher rate deduction. The basis must be established via HM Revenue & Customs and contactors must also submit monthly returns to HMRC. In addition, since 6 April 2016, mandatory online filing of these returns were imposed by HMRC with mandatory verification of subcontractors also in the pipeline for next April.
Eagle Accountancy has worked with clients in the construction industry sector for twenty plus years and continues to help and advise numerous CIS clients both contractors and subcontractors and can help you comply with your CIS obligations.
Our dedicated team can help with: