CIS ― compliance

Produced by Tolley

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • CIS ― compliance
  • Registering as a contractor for CIS
  • Registering with HMRC
  • Registering as an organisation
  • Registering as an employer
  • Registering as a CIS contractor
  • CIS returns and payment of tax
  • Electronic filing
  • Sub-contractor payment statements
  • Late CIS returns and tax payments
  • More...

CIS ― compliance

The construction industry scheme (CIS) was devised to limit theamount of tax lost as a result of under-declarations or failures to notify chargeability by sub-contractors who came to work in theUK for relatively short periods without paying any tax.

The scheme operates to withhold tax at source at thepoint of payment, thereby reducing therisk of a subsequent default by thesub-contractor. Although, if thesub-contractor can prove he has complied with his tax obligations he is able to receive payments gross.

The scheme has undergone regular changes since its inception. The current regime came into effect on 6 April 2007.

For a summary of theCIS, see theCIS ― overview guidance note.

For an in-depth discussion of contractors and sub-contractors, see theCIS ― contractors and CIS ― subcontractors guidance notes.

Finance Act 2021 introduced legislation to prevent non-compliant businesses from using theCIS to claim tax refunds to which they are not entitled. The measure allows HMRC to reduce or deny CIS set-off credit claimed on employer returns where thesub-contractor cannot evidence thedeductions and does not correct their return when asked (see theCIS ― subcontractors guidance note).

Registering as a contractor for CIS

A contractor needs to register with HMRC when it first engages sub-contractors within theCIS. There are several layers of registration required, some of which thecontractor may already have in place, depending on his circumstances. These are registration:

  1. with HMRC

  2. as an employer

  3. as an organisation for thepurposes of HMRC’s online services

  4. as a CIS contractor

Registering with HMRC

This is usually done when a business starts up so is only relevant as part of theCIS registration process if thecontractor is a new business that is not already registered with HMRC. A contractor starting up a new business can register with HMRC as an organisation and an employer all as part of thesame process on theonline registration page.

Registering as an organisation

Only ‘organisations’

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