CIS Compliant Solution Facts

CIS
Compliant
Solution
Facts
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CIS Compliant
Solutions
Construction Industry Scheme (CIS) Facts
The Construction Industry Scheme was set up by HMRC
to regulate payments in the construction sector. For any
contractor or subcontractor working in the construction
industry, the Construction Industry Scheme is an essential
part of tax compliance, mandatory for those that fall within
its parameters. But what exactly is the scheme all about,
and how does it work for contractors and subcontractors
alike?
What is CIS?
The Construction Industry Scheme is designed to regulate
the flow of payments in the construction sector. As one of
the UK largest industries for self-employment, HMRC faces
the potential for significant losses on taxable payments to
self employed construction industry workers. As a result,
CIS was established to ensure payments are accurately
tracked and reported, and to make certain that payments
between contractors and subcontractors are declared to
HMRC.
CIS is compulsory for any self-employed subcontractor
operating in the construction industry, as with any
contractor employing the services of self-employed
construction workers. A wide range of entities, including
some involved in commissioning construction work but
not necessarily operating in the construction sector, will
fall under the remit of CIS provisions, and virtually all selfemployed construction subcontractors are required to
register and submit returns accordingly.
Do I have to register for CIS?
If you are a subcontractor in the construction industry, you
will most likely be required to register for CIS. CIS does
not apply to those who are employed, with their payments
handled through regular PAYE channels. However if you
are self-employed, you will be expected to register for CIS
before you commence work in the construction sector.
Similarly, if you run a building company and subcontract
any work yourself, you may need to register with HMRC
under these provisions, in order to stay compliant with
HMRC requirements. CIS does not apply to those who
are engaged in surveying or architectural work, nor the
manufacture of building components off-site. If only a small
part of your work falls within the parameters of CIS, you are
still obliged to register and adhere to the provisions within
it.
How do I register for CIS?
Registering for CIS is a relatively smooth process,
conducted online or through HMRC’s CIS helpline, which is
available for those who have already registered as selfemployed. Failure to register with CIS before starting work
will result in a more significant tax deduction from any
payments you receive, with contractors obliged to withhold
30% of the payment in respect of your tax liability as a
contractor.
In order to register for CIS, you must first have a National
Insurance number, and you must register for HMRC’s online
service through the Government Gateway system. This
process requires a physical address and an email address,
and you will be sent verification information by post to
activate your account.
It is essential that you pre-register for CIS before beginning
any construction work, in order to prevent additional costs
and delays in receiving the payments you are due.
What does CIS mean in practical terms?
As a subcontractor, you are obliged to register for CIS, and
to keep detailed records of the income and expenditure of
your relevant trading. You are permitted to deduct the cost
of materials you have supplied from the taxable amount,
and this will be handled in the hands of the contractor, who
is obliged to withhold the relevant tax under CIS rules for
forward payment to HMRC. At the end of the year, any tax
deductions count towards your total liability for tax under
self-assessment, and will be factored in to that equation in
determining how much further tax you will be required to
pay.
If you are a company subcontractor, you can also offset CIS
payments against your own liability to PAYE and NI in realtime. This prevents paying double tax in the first instance,
and provides a slight advantage to those businesses in this
situation.
How do I pay tax as a subcontractor?
Under CIS rules, subcontractors are required to submit
a return every year, detailing their trading performance
and any profits that have arisen from their work in the
construction sector. Any payments that have been made
throughout the course of the year can be offset against the
final liability, and a balancing payment will either be issued
or requested from HMRC, depending on the outcome of the
return calculation.
Companies within our group have been accredited with the following:
CIS Compliant
Solutions
How do I pay tax as a subcontractor?
Tell me more about your CIS Solutions
Under CIS rules, subcontractors are required to submit
a return every year, detailing their trading performance
and any profits that have arisen from their work in the
construction sector. Any payments that have been made
throughout the course of the year can be offset against the
final liability, and a balancing payment will either be issued
or requested from HMRC, depending on the outcome of the
return calculation.
Navigating the ins and outs of HMRC policy around CIS is
difficult, especially for those who don’t have knowledge
and experience of the system. Futurelink Group provides
a holistic CIS solution, providing everything self-employed
contractors and subcontractors need to remain fully aboveboard and compliant.
In the short-term, tax deductions will be applied to
payments made to you by contractors, in order to secure
this money for the Exchequer. These amounts are factored
in to the balance of your standing tax liability at the end of
the year, so by the time you submit your subcontractors
return, you will most likely already have paid the majority of
applicable taxes.
Do I still need to complete a self-assessment tax return?
Subcontractors are required to complete self-assessment
tax returns, irrespective of whether or not they fall under
the parameters of the CIS requirements. When it comes
to completing your self-assessment return, you will be
able to offset tax already paid over the course of the year,
and on the assumption you don’t have any other income
originating from sources other than those covered by CIS,
you should have no further tax to pay.
The CIS solution ensures all applicable taxes and returns
are handled effectively, along with facilitate Faster Payment
transactions and free text alerts so you can easily and
quickly keep track of payments. Construction industry
workers who choose the Futurelink Group CIS service also
benefit from round-the-clock access to payment, tax and
personal information, plus the benefit of reduced rate tax
returns. For anyone working in the construction sector, the
CIS solution can remove much of the hassles of CIS rules
around invoicing, sending and receiving payments and
taxation – freeing you to focus on getting the job done.
Contact our friendly team of experts for more information
on 01923 277 900.
For many contractors, calculations may not be quite as
simple, and it may be the case that there are other streams
of taxable income arising throughout the year. This can
quickly become a complicated tax equation, and may result
in an additional tax liability over and above any monies paid
or withheld under CIS rules.
Are you a recruiter?
As a recruitment agency or business you may choose to use a third party
for part, or all, of your temporary worker payroll.
Our solutions are ideal if:
To contact us about our contractor solutions,
call us on:
01923 277 900
[email protected]
• You don’t have sufficient resources in-house and want to reduce costs
• You want to stay compliant with the latest HMRC legislation
company/futurelink-group
• Your contractors & temporary workers already use a payroll provider
Kings House, Home Park Estate, Station Road,
Kings Langley, Hertfordshire WD4 8LZ
It’s time we talked.
Call one of our experts today to register or ask for advice.
@futurelinkgroup
futurelinkgroup.co.uk
Companies within our group have been accredited with the following:

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