Dyer & Co has specialists available to help clients with all technical accounting issues and these include Construction Industry Scheme (CIS) and IR35 matters. Both areas cover contractors and sub-contractors and can be a minefield for businesses, given that any failure in compliance can lead to significant fines.
Our expert team can help relieve the burden of the technical treatment of these transactions as well as a good deal of stress and heartache. As a well-established and trusted firm that encompasses areas of Financial Accounting, Registered Auditors and Tax Accounting, you can trust us to deal effectively with your CIS and IR35 responsibilities.
What is a CIS scheme?
CIS – meaning ‘Construction Industry Scheme’ is a scheme that sets out the rules for how payments to subcontractors must be handled by contractors in the construction industry. Under the CIS scheme, all payments made from contractors to subcontractors must take account of the subcontractor’s tax status as determined by HM Revenue and Customs / HMRC. The deductions are taken at a standard rate from subcontractors when contractors pay them. These deductions count towards the contractor’s taxes.
CIS statements and tax
In order to document the deductions within each contractor payment to subcontractors a CIS statement must be provided to every subcontractor the contractor has made a deduction from. However, if you are a subcontractor, you can apply for CIS gross payment.
Under the Construction Industry Scheme, a sub-contractor’s payments are deducted by the contractor as a means of making a contribution to their PAYE and national insurance in advance. The contractor must be registered for the scheme whereas a sub-contractor does not. However, any unregistered sub-contractors that are not registered will have to make their payments at a higher rate, which is clearly undesirable. The CIS Gross Payments is a state in which a subcontractor does not incur any deductions from the contractor and is paid in gross.
To be clear, the company will be required to register if they pay any sub-contractors for construction work or if they spend above £1 million per annum on construction work. Any company/individual must register if they undertake any sub-contract work for a construction company. If you come under both categories then you will need to register for both. It’s easy to see why many businesses fall foul of these terms and conditions and end up paying higher rates or receiving penalties for not following the correct procedure. At Dyer & Co we have specialist staff that can lead you through the minefield and help prevent unnecessary and punitive expenses.
We can identify the individuals that require registration, ensure that all matters are kept up to date and clarify if the construction work being undertaken is in the correct classification for the scheme. Some areas of construction, such as architecture and surveying for example, do not come under the scheme. For more details please contact us so we can arrange to have all your needs addressed and your financial affairs regarding CIS placed in the most expert and dedicated hands.
What is CIS gross payment?
The CIS gross payment is a state in which a subcontractor does not incur any deductions from the contractor and is paid in gross. Your tax and national insurance is then paid in full to HMRC at the end of each tax year. You must carry out a CIS monthly return in order to keep your CIS gross payment status.
Who would need CIS gross payment?
A business which can apply for CIS gross payment status is a sole trader, a limited company or partnership that’s within the construction industry. If you are a subcontractor you can register for the CIS scheme, which will then allow you to apply for gross payment status. Companies who are based abroad can also register for the CIS scheme as long as all work is carried out within the UK. If you are interested and would like to know ‘how do I get CIS gross payment?’ Dyer and co have provided more information on the CIS Gross payment page which includes advice and information on how to register for CIS.
What are the advantages of having CIS gross payment to businesses?
The benefits of having CIS gross payment status is that the deductions will not apply to you or your business, and the tax and national insurance you pay will be paid at the end of each tax year after you have carried a self assessment tax return.
How does CIS gross payment link to the Construction Industry Scheme?
If you have registered for the CIS scheme, you will be deducted at a standard rate of 20% when paid by the contractor. If you do not register for the CIS scheme you will be deducted at a rate of 30% when paid by the contractor. The CIS scheme links to Gross payment status as you can only apply for CIS Gross payment status if you have registered for the CIS scheme.
If your business would like any advice, information or guidelines regarding CIS schemes or gross payments, the experienced professionals at Dyer and co would love to hear from you. Please contact the team using the contact us tab and sending a message, or call +44(0)2083080777.