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Construction Industry Scheme

CIS Monthly Returns: Are You Eligible?

Are you a contractor operating in the construction industry? If so, you may be eligible to file Construction Industry Scheme (CIS) monthly returns. This article will provide an overview of what CIS is and who is required to file returns. We’ll also discuss the penalties for not filing returns on time.

What is a CIS Monthly Return?


Construction Industry Scheme (CIS) monthly returns are filed by contractors in the construction industry in order to report their subcontractors’ payments. These returns are due on a monthly basis. The return period is one income tax month, from the 6th of one calendar month to the 5th of the next.

The Construction Industry Scheme (CIS) requires contractors to deduct money from subcontractor’s payments and send it directly to HM Revenue and Customs (HMRC). The deductions act as a sort of pre-payment for the subcontractor’s tax and National Insurance.

Returns will include details of all payments made in respect of construction industry operations, including:

  • Payments made gross
  • Payments made under deduction at the standard rate
  • Payments made under deduction at the higher rate

Contractors must register for the scheme. Although subcontractors do not have to register compulsorily, those who aren’t registered have a higher rate of deductions taken from their payments.

CIS covers most construction work on buildings and structures, as well as civil engineering work like roads and bridges.

How to Register for CIS Monthly Return?


Registration must be done before you start work. The process may take up to 6 weeks.

To register as a contractor you’ll need to complete section 1 of the CIS registration form; original tax clearance certificate from the tax authorities of your company’s home country and a completed form 64-8 if you have an agent working for you.

In order to complete a CIS Monthly Return, you will need the following information:

– The name and address of each subcontractor paid during the month

– The amount paid to each subcontractor

– The date the payment was made

– The nature of the work carried out by each subcontractor

Who Should File a CIS Monthly Return?


All contractors operating in the Construction Industry Scheme must file monthly returns. 

You should register as a contractor if you pay subcontractors for construction work, or your business does not do construction work, but you have spent more than £3 million on construction in the 12 months since you made your first payment.

Subcontractors do not need to file a return but should make sure that they keep records of all payments received from contractors, as this is used to assess their tax and National Insurance status.

You do not have to register if you only do certain jobs, including architecture and surveying; scaffolding hire (with no labour); carpet fitting; making materials used in construction including plant and machinery; delivering materials; work on construction sites that’s clearly not construction – for example, running a canteen or site facilities; etc.

Late Payments


HM Revenue and Customs (HMRC) will send you a late filing penalty notice telling you how much to pay if you’ve filed your monthly return late.

You can appeal by using HMRC’s online service, or writing to them – include your Unique Taxpayer Reference (UTR) and the payment reference shown on the notice.  Payments are due within 30 days of receiving this notice.

Conclusion


Contractors in the Construction Industry Scheme are required to file monthly returns. Failure to do so can result in financial penalties and interest charges. It is important that contractors understand their obligations under the scheme, as well as any appeals process they may be able to access if they disagree with a decision made by HMRC.

Before starting any construction work, contractors should ensure that they are registered with the Construction Industry Scheme and understand the requirements around filing monthly returns. Subcontractors do not need to register, but should keep records of all payments received from contractors. 

By understanding their obligations under the Construction Industry Scheme, contractors can ensure that they meet their legal responsibilities and minimise the risk of financial penalties. 

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