Construction Industry Scheme CIS

Construction Industry Scheme CIS

CIS CASE STUDY

"I don't understand CIS"

Overview

  • Mr Decorator works in the Construction industry and is excellent at doing manual work.

  • On the other hand, he struggles with the financial side of his business.

  • He was clueless as to how to deal with The Construction Industry Scheme CIS.

  • He did not know what he must do as a CIS Contractor.

Approach

  • At VF Accountants, we sympathise with Mr Decorator and helped him register for CIS.

  • Subcontractors must also register with HMRC as self-employed or limited company. However, they are not automatically set up for CIS.

  • VF Accountants thus had to inform Mr Decorator that his Subcontractors missed another step.

  • VF Accountants could then verify each new Subcontractor to generate a Verification Number and tax treatment, meaning how much tax to deduct.

  • CIS tax must be deducted before Total payments are made to Subcontractors. However, Mr Decorator tends to miscalculate it.

  • Fortunately, VF Accountants submitted the correct Contractor's Monthly Returns to HMRC and on time.

Results

 
Avoid paying high taxes

Avoid paying CIS tax @ 30%

Avoid paying high taxes
Avoid penalties

Avoid penalties

Saving
Spend more time with Family

Spend more time with family

Family time

Conclusion

  • In effect, as VF Accountants successfully registered Subcontractors, they avoided having tax deductions at a higher rate of 30%.

  • Thus, we deduct the correct CIS Tax for you and your Subcontractors.

  • Mr Decorator avoided penalties of up to £3,000 or 100% of the CIS deductions on each incorrect return, whichever is higher.

  • He can finally spend more time with his growing family as he does not have to worry about CIS.

 

Our typical CIS client's Pain Points and our Solutions

CIS Pain Points

Our Solutions

Wasting time on Job costing

We set your business up on Quickbooks Online so that you can provide Estimates and raise Sales Invoices on the go. Thus you get paid quicker.

Clueless as to whether you are on the right path to success.

By tracking your sales and expenses for each of your project, you are able to know if you made any profits on each project.

Frustrations with not knowing what to claim as expenses

We inform you of the type of expenses you can claim for business so as to minimise your taxes.

Do not understand Construction Industry Scheme CIS

The above Case Study demonstrates that by us dealing with your CIS, you pay the correct CIS tax and avoid penalties. You are therefore able to be with your family.

 
FREQUENTLY ASKED QUESTIONS (FAQ) ABOUT CIS
Do I count as a Contractor?

First of all, as a Contractor, you:

1. either pay your Subcontractors for construction work

2. or your business does not carry out construction work.

    This is however where you spend on average more than £1 million a year on construction over 3 years.

 

By the way, all Contractors must register for CIS with Her Majesty’s Revenue & Customs (HMRC).

Am I a Subcontractor?

You are a Subcontractor if you do construction work for a Contractor.

What is Construction Industry Scheme CIS?

Under CIS, Contractors must deduct tax from payments to their Subcontractors. Such Tax is paid over to HMRC. It is an advanced payment towards a Subcontractor’s Tax and National Insurance.

What counts as construction work under CIS?

Construction work includes:

  • alterations, repairs and decoration

  • building work

  • cleaning the inside of buildings after construction work

  • demolition and dismantling

  • heating, lighting, power, water and ventilation installations

  • preparing a site, for instance, laying foundations and providing access works.

 

Such construction work can be to a temporary or permanent building or structure. Furthermore, it includes civil engineering work such as roads and bridges.

 

What does not count as construction work under CIS?

The following tasks however do not count as construction work under CIS:

  • architecture and surveying

  • carpet fitting

  • delivering materials

  • making materials used in construction like plant and machinery

  • running a canteen or site facilities

  • scaffolding hire (not including labour)

What is a Contractor's Monthly Return?

HMRC requires Contractors to inform them of the payments made to their Subcontractors every month. They do so through a Contractor's Monthly Return.

If I do not make any payments to Subcontractors in some months, do I still need to submit a Contractor's Monthly Return?

Yes, you must still file a Nil Return.

Which dates does the Contractor's Monthly Return cover?

The Contractor's Monthly Return starts on the 6th of the month and ends on the 5th of the following month. For example, a Contractor may prepare his monthly return from 6 June to 5 July.

What is the deadline for submitting the Contractor's Monthly Return?

The Contractor's Monthly Return must be submitted by the 19th of every month following the end of the tax month. For instance, if you prepare a return from 6 June to 5 July, your return must reach HMRC by 19th July. If it falls on a weekend or bank holiday, then the monthly return must reach HMRC on the last working day before it.

What is the deadline for paying CIS?

If you are paying HMRC by post, CIS payment must reach HMRC by the 19th of every month following the end of the tax month. Otherwise pay electronically by 22nd of every month. If it falls on a weekend or bank holiday, then payment must reach HMRC on the last working day before it.

How do I contact HMRC CIS Helpline?

You can contact HMRC as follows:

1. Sign in to CIS Online.

2. Webchat to speak to an HMRC adviser.

3. Phone HMRC on Telephone number 0300 200 3210, or if you are Outside the UK, call +44 161 930 8706. HMRC phone line opening hours are Monday to Friday 8am to 6pm but Closed on weekends and bank holidays.

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