Experts in CIS for Contractors
If you're a contractor in the construction space, you'll want to partner with a specialist CIS payroll company to keep yourself protected.
Subbie Reclassification Protection
Payroll Made On Time Every Time
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Expert CIS Support and Advice
Ensuring You're CIS Compliant
Navigating the Construction Industry Scheme (CIS) as a contractor can be daunting and challenging. However, it is vital to understand your responsibilities in order to stay compliant and avoid costly penalties.
At Contractwise, we offer a range of CIS services including payroll audits that protect contractors, remove the risk of HMRC reclassification and ensure CIS compliance.
We can help contractors understand their CIS obligations and how by partnering with our expert team we can simplify the process, save you time and provide you with peace of mind.
Our CIS services include:
A free compliance audit
- Full CIS compliance
- Protection from HMRC reclassification
- Support with employment tribunals
- CIS reporting and payroll calculations
- IR35 liability advice
- Holiday and sick pay claims
- Legislation updates that ensure you’re always compliant
- Free contract drafting
- Free payment software
CIS tax returns
Your CIS responsibilities
Introduced in the 1970s, the Construction Industry Scheme, commonly known as CIS, was created by HMRC as a way to regulate tax payments within the construction industry. It ensures that subcontractors’ income tax is deducted by the contractors at source and correctly paid to HMRC.
As a contractor, you are at the very heart of the scheme.
All contractors must register with CIS by law and you have several responsibilities. This includes ensuring all deductions are made correctly and payments are made promptly. If you fail to adhere to these responsibilities, you will face significant penalties which may put your business at serious risk.
The main CIS responsibilities for contractors include:
Registering for CIS
Verify subcontractors
Deduct and pay tax
Submit monthly CIS returns
Provide payment and deduction statements
Keep accurate records
Registering for CIS
If you hire any subcontractors for any work in the construction industry, it is mandatory to register with the Construction Industry Scheme. This can be done online on the HMRC website. This is the first step to legally operate within the scheme.
Verify subcontractors
Before any payments can be made, you must verify every subcontractor with HMRC.
This will determine their tax status which will fall into the following categories:
Registered subcontractors - subject to a 20% tax deduction
Unregistered subcontractors - subject to a 30% tax deduction
Gross payment subcontractors - no deduction is required as they manage their own tax affairs
You’ll receive a verification number from HMRC, which must be included in all monthly returns. Even if you do not take any deductions from a subcontractor (as they have gross payment status) they must still be verified.
Deduct and pay tax
Once subcontractors have been verified, you as a contractor are then responsible for deducting the appropriate tax from their payment. This tax must be paid directly to HMRC by the 22nd of each month if paying electronically or by the 19th if paying via post.
Submit monthly CIS returns
Each month you must also submit a monthly CIS return to HMRC which details the following:
Payments that have been made to subcontractors
Tax deductions that have been made
Verification details for every subcontractor
Failing to submit CIS returns on time or with errors will cause your company to be hit with penalties by HMRC. These penalties will increase the longer the delay persists.
Calculate the penalties if HMRC decides your subbies are employees
With HMRC carrying out tens of thousands of new investigations each month, there is a high risk of big fines and penalties if your contracts are not satisfactory, or you have not fully understood the ever changing complexities of CIS (Construction Industry Scheme).
Contractors
Eliminating reclassification risk by HMRC with CIS compliance and seamless payroll, every time.
Subcontractors
Ensure you’re paid correctly on time, every time as well as benefiting from our expert guidance and resources.
Agencies
Keep your construction staff compliant with CIS deductions and protect yourself from HMRC fines.
Need Some Advice?
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Discover how Contractwise can help you be fully compliant to eliminate your HMRC and employment risks, call us or fill in your details and we will call you back.
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Protection from HMRC reclassifing your subbies as employees.
If HMRC were to reclassify just one self-employed subbie as an employee with an average weekly pay of £1,000, the liability would surpass £9,500 in a year.
For a group of 15 self-employed subbies, this liability would escalate to over £136,000. These staggering amounts exclude potential HMRC fines, unpaid interest charges, or legal costs associated with challenging HMRC.
