All businesses within the Construction Industry are governed by the rules and legislation of the Construction Industry Scheme (CIS) in relation to payments to subcontractors and construction work. If your construction business is required to make submissions within the scheme, Zenza can help you get it right.
As a contractor you have to make a monthly return to HMRC, the return details all payments made to all subcontractors within the scheme in the preceding tax month, This is regardless of whether the subcontractors were:
It will also confirm that the employment status of the subcontractors has been considered and also that the verification process has been correctly dealt with. If no subcontractors have been paid in a month, contractors need to make a nil return.
Monthly returns must reach HMRC within 14 days of the end of the tax month they relate. e.g. A return of all payments made to subcontractors between 6 May and 5 June must be sent in sufficient time to reach HMRC by 19 June.
Providing documentary evidence of a deduction
As a contractor you must provide a written statement to every sub contractor from whom a deduction has been made within 14 days of the end of each tax month. The statement may be issued by electronic means but only where:
As a contractor you can choose the style of the statements, but they must include the following information:
A monthly payslip must be provided to each subcontractor paid, showing the total amount of payments and tax deducted.
Subcontractors that are limited companies can set off deductions
Deductions which a subcontractor bears on its receipts can be off set against the following sums payable to HMRC.
The company will need to reduce the amount of PAYE, NIC’s, Student Loan repayments and any CIS deductions that the company pays by the amount of CIS deductions made from the company’s income. This should be done monthly (or quarterly, as appropriate) and the calculation should be shown on the company’s employer payment summary (EPS). If for any month or quarter, the company’s own CIS deductions are greater than the PAYE, NIC’s, Student Loan and CIS liabilities payable, the company should set off the excess against future payments in the same tax year.
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