CIS is short for “Construction Industry Scheme”. This is the regulation of payments by HMRC which are made to subcontractors by contractors within the construction sector. Contractors who are HMRC registered under the CIS have a number of rules and responsibilities to comply with. Subcontractors who are working for contractors must be HMRC verified by their contractor to ensure the right amount is being deducted from the subcontractor’s payments. In order to regulate these payments, a CIS monthly return must be submitted to HMRC. When a subcontractor is verified, the contractor can then check whether or not their subcontractor is HMRC registered under the CIS together with their status for tax.
Which Details Are Included On A CIS Return?
The contractor has to give all the details of any deductions and payments made within two weeks of the month ending. The month for tax purposes begins on the sixth day of the month and ends on the fifth day of the next month. The contractor must provide a statement for every payment they make. Even though there is no obligation for the subcontractor to be issued with a statement if gross payment has been made, it is still advisable to issue one.
How Often Does A CIS Return Need To Be Submitted?
The CIS monthly return must be sent by contractors to the HMRC every month, even if they have made no payments. Every payment together with the deductions made during the previous month should be included on the monthly return and it can be sent to HMRC via the post, Electronic Data Interchange or the HMRC’s website. Should the contractor not be making any payments to their subcontractors for up to a 6 month period, it is possible to contact HMRC to update their CIS status to inactive. During a period of inactivity, no returns need to be sent to HMRC, however the contractor must note when the period of inactivity is due to end.
If you need help with your CIS compliance and CIS refunds please contact The Accountancy Solutions on 01216297768 or 02070784001 for further advice.