Construction Industry Scheme

Construction Industry Scheme

Construction Industry Scheme is a set of special rules that define how the contractor will handle the payments made to subcontractors for construction work. It is a way to increase revenue collected from the industry. Contractors are required to subtract money from the subcontractor’s payment and pay it to HMRC as tax. CIS applies to you if your business spends more than £1 million in three years. If you take a job and contract it to someone else, you are working as a contractor and if someone assigns a job to you then you will be working as a subcontractor. At Hayes Accountants, our chartered accountants will assist you in all the processes for Construct Industry Scheme with their best knowledge in the field.

What CIS Covers?

The construction activity that is included in the Construction Industry Scheme is the following:

  • Site preparation
  • Dismantling & demolition
  • Construction work
  • Modification, repairing & decoration
  • Installation of heat, light, power, water and ventilation structure

Registration for CIS

All contractors are required to register with HMRC for the Construction Industry Scheme. It is the responsibility of the contractor to make deductions of tax from the amount given to subcontractors and pay it to HMRC. The contractor also needs to verify the status of subcontractors with HMRC before making amount deductions. You need to verify:
● No tax deduction is required if the subcontractor is “Gross”.
● A 20% deduction is required if the subcontractor is CIS registered.
● A 30% deduction is required if the subcontractor is unregistered.

Penalty if you fail to register for CIS

If you are failed to deduct the right amount of tax and notify HMRC, you will have to pay a fine of £3,000 or more. If you fail to made return to HMRC by the 19th of each month for the previous tax month, you will be charged £100 per day.

Hayes Accountants

If you are looking for expert accountants near you, Hayes Accountants are the professionals to give accounting services all across the UK. Our chartered certified accountants will assist you in all the administrative work according to the legislation of HMRC and make sure that you pay the right amount of tax to HMRC.

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