CIS Tax Return Services
From expert accountants based in London
Construction industry scheme or ‘CIS’ is a form of tax levied on subcontractors working in the construction industry. This tax came into place to safeguard against tax evasion by stopping contractors from paying ‘cash in hand’.
Before the subcontractor is paid by the contractor – 20% if subcontractor is registered, or 30% if unregistered – is deducted from the subcontractor’s payment and sent to HMRC. These are essentially advanced payments towards the Income Tax and National Insurance that you would have paid if you were filing your self-assessment tax returns.
Tax return services for contractors
Our experts at Evotax provide high-quality accounting solutions to the construction industry scheme. It doesn’t matter if you are a limited company or a sole trader; our accountants can help you the following way:
- A dedicated account manager.
- Cloud Accounting Software.
- CIS Registration of subcontractors & Contractors.
- Help in applying for gross payment status.
- Prepare CIS returns every month.
- Submit accounts and tax returns.
- Ensure you claim as much tax refund as possible.
- Tax planning service to grow.
FAQ about the construction industry scheme
If you have a functioning business in the construction industry, and you hire subcontractors to carry out some work for you, you become the Contractor.
It is at this point, that you are required to register as a contractor.
If you are a business in the construction industry scheme and accept work from someone else, you become a subcontractor.
When this happens, you can register as a subcontractor.
When a subcontractor registers, you register either as a Gross Subcontractor (0% Tax deduction) or a Net Subcontractor (20% Tax deduction). If you don’t register you will be taxed at 30%.
Depending on the subcontractor’s circumstances, there are several different kinds of cards that can be issued:
- CIS 4(P) – Basic card – Most subcontractors get this.
- CIS 4(T) – This is a temp card if you cant give HMRC your NI number for some reason.
- CIS 5, CIS 5 (Partner) or CIS 6 – If you have passed the test for Gross payment status, then you will receive this card.
This is done by Contractors verifying their subcontractors with HMRC. Therefore, HMRC will provide information on which contractor is at 30%, 20% or 0%.
All contractors are required to verify subcontractors with HMRC and deduct the correct amount of CIS Tax.
Each month Contractors must submit a monthly return to HMRC. This will entail description of all payments made to subcontractors. The form that is used to submit this is called CIS300.
Contractors are also obliged to provide all subcontractors with a payment and deduction statement. This statement provides subcontractors with written evidence of how much CIS Tax deduction.
Subcontractors need to provide their contractors with their Unique Tax Reference (UTR) Contractor, which will help the contractor to complete the verification process.
Subcontractors must provide invoices which would clearly show a split between labour and materials, to ensure the Contractor is able to accurately calculate the correct CIS Tax deduction.
Subcontractors must keep a record of all the payment receipts and CIS deduction statements received from contractors.
No. You are not required to register for reverse charge, unless you are providing specific services that are reported under the construction industry scheme. You are therefore not required to register beforehand.
HMRC has advised as following:
“It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers). This will affect you if you supply specified services that are reported under the Construction Industry Scheme (CIS).”
CIS is an insurance policy for HMRC against those who have the intention of tax avoidance. However, honest, tax-paying people end up paying too much tax as a consequence.
If you are a subcontractor and are submitting your self-assessment tax returns, you can offset CIS against your tax liability. Whatever the difference, you either pay or get a rebate from HMRC.
For example, at the end of the month subcontractor is liable to pay HMRC £10,000 in PAYE & NI, but has suffered £7,000 for CIS tax deductions. In this circumstance the subcontractor has paid £3,000 over what was actually do.
Therefore, at the end of tax year, and CIS tax can be reclaimed from HMRC in this instance £3,000.
If CIS does not completely cover the type of work you do, you can still claim alongside a job under the remits of CIS. In this instance, you should allocate the full amount through the one job listed, for example, ‘painting’.
We will run your self-assessment as we would if there was no CIS involved. This entails all the expenses you can claim, along with all the allowances and reliefs you may have. After which, all the CIS is deducted from the calculation. This will give you your tax liability or tax rebate.
Essentially the less you earn, the more CIS you can claim. Once your income reaches a certain threshold (Tax-free), any income beyond this will be subject to tax.
We can help you identify which expenses to claim to maximize your chances of a refund.
Once your tax return has been submitted, it can between one and eight weeks.
The amount of CIS refund will depend on individual circumstances. We cannot guarantee any amount.
It is a pretty tricky area, and it’s not always straight froward the kind of expenses you can claim as a subcontractor. For this reason, every year, a lot of subcontractors end up paying a lot more tax than is due.
Here is a shortlist in very broad terms:
- Equipment and Tools – Along with all the tools, you can also claim for specialised protective clothing.
- Travel and Transport – Keeping track of your mileage is important, as you can claim all fuel used, along with food and accommodation costs.
- Office Costs – Anything from internet bills to stationary.
- Administrative Costs – Any costs you incur in regards to bookkeeping, calls, etc, you can claim.