One of the many services we offer is accounting for the Construction Industry Scheme.

So What is the Construction Industry Scheme?

The scheme aims to minimise tax evasion within the construction industry in the United Kingdom. The scheme covers most construction work to permanent or temporary buildings or structures and civil engineering work such as roads and bridges. Work covered
under the scheme includes site preparation, construction, repairs, alterations,
decorating and demolition.

The scheme applies to all types of businesses involved in the construction industry
including companies, self-employed individuals and partnerships.
Under the scheme, contractors deduct money from a subcontractor’s payments and
pass the deducted funds to HMRC. Deductions count as advance payments
towards the subcontractor’s tax and National Insurance (NI).

Registration as a contractor or subcontractor:

  • Registering as a contractor follows the same process HMRC use for
    setting up as a new employer applying for a PAYE scheme.
  • The easiest way to register as a subcontractor is via the Government
    Gateway using CIS online.
  • There are three rates of deduction; 20% for subcontractors registered
    under CIS, 30% for subcontractors not registered under CIS and 0%
    for subcontractors who have gross payment status.

Responsibilities as a Contractor:

  • Before a contractor can pay a new subcontractor the contractor is
    required to verify them with HMRC.
  • A contractor must keep records of the gross amount of each payment
    invoiced by subcontractors excluding VAT; the costs of materials the
    subcontractor invoiced the contractor for and all deductions made from
    subcontractor payments.
  • The contractor must retain CIS details for at least three years following
    the end of the tax year.
  • A contractor must file a monthly return with HMRC which provides
    information about payments made to subcontractors.
  • Contractors are also required to issue each of their subcontractors with
    a statement that declares the amount deducted from their payments.
  • Contractors pay CIS deductions to HMRC in the same way as they pay
    PAYE and National Insurance payments.

Please get in touch if you would like Cloud Accounts Services Limited to handle your Construction Industry Scheme accounting duties, we will be happy to help.