The Construction Industry Scheme (CIS) can seem complex and intimidating when you first encounter it. To help you stay compliant and on the right side of HMRC, here are some simple tips to ensure your CIS tax returns are straightforward.
Whether you’re a contractor or a subcontractor, it’s important you register with the scheme as soon as possible. Under CIS, all contractors who engage subcontractors to carry out construction work or companies that spend over £1million a year for three years on construction must register. Contractors must be registered for CIS before hiring their first subcontractor. If they fail to do so, contractors could be subjected to back taxes.
Before you engage a subcontractor, you need to double check the employment status. HMRC’s Employee Status Indicator will clarify the employment status of the subcontractors. Get it wrong and HMRC believe your subcontractors should actually be employees, you could face serious financial implications.
Make sure you set aside time each month to prepare your CIS returns. Establishing a routine will help make sure that you don’t miss anything and can account for all the subcontractors you’ve engaged that month. Staying on top of your returns will also ensure you’re not fined for late returns. These fines gradually increase depending on how late your return is so make sure you stay organised.
Before submitting your CIS returns, double check that all the information you’re submitting is correct. Check the Unique Taxpayer Reference of your subcontractor and that their company name is correct. This will help to minimise paperwork and unnecessary communication between yourself and HMRC.
CIS is complicated and the financial implications of getting it wrong are costly. So if you find yourself confused by the legislation, short of time or simply don’t want the hassle of dealing with HMRC, we can help. Since 1996 we’ve helped construction companies of all sizes with CIS obligations. Over 2,000 companies now trust us with contracts and compliance and we can help you too.
If you’d like to know more about what we can do, get in touch today.