Construction Industry Scheme (CIS)

After many false starts the new Construction Industry Scheme (CIS) began in April 2007. By now you will be familiar with the monthly returns required to HMRC which:

  • Confirm that the employment status of subcontractor has been considered
  • Confirm that the new verification process has been correctly dealt with
  • Detail payments made to all subcontractors
  • Detail any deductions of tax made from those payments.

The whole system is underpinned by a rigorous penalty regime, which includes penalties for incorrect monthly returns, failure to provide CIS records for the Revenue, incorrect declarations about employment status, failure to send in a monthly return and failure to provide a subcontractor with a payslip. All of these penalties can add up, and you could be looking at up to £3,000 per month every time you make a mistake.

We at C and S Finance can provide assistance with any aspect of the practicalities of complying with the new regime. HMRC view compliance with the new regime as your responsibility and the penalties will be automatic.

The most contentious issue with the new regime is that you are required to verify monthly the employment status of each contractor. Employment status depends on a number of factors; these have been built up in case law over many years. HMRC have been helpful in providing a status indicator tool on their web site, but software appears to be weighted towards classifying subcontractor as employees.

It must be noted that HMRC would prefer contractors to be employees as this would increase their tax taken and also administration burden. If your workers are employees there will be employer responsibilities such as complying with your responsibilities under Tax Law, the Employment Rights Acts and the Working Time Direction. You need to know where you are.

C and S Finance are specialists in employment status, and will provide you with a written report to verify the status of a subcontractor. For a fixed fee of £250 we will provide this within 5 days of receiving the required information from you. If you require a faster turnaround please contact us.