Industry Leading CIS Contractor Solutions

The Construction Industry Scheme also known as CIS, is a statutory tax scheme that was created by HMRC for those who work in the Construction.

The scheme was brought in to effect in 1971 to protect construction workers from false employment and minimise tax evasion in the construction industry.

The original 714 certificates have evolved somewhat since then and today, a worker’s Unique Tax Reference (UTR) number has simplified the process.

CIS applies to the majority of construction workers who are self-employed and that work within the UK (within UK territorial waters up to the 12-mile limit). However, there are some job roles associated with construction that are exempt from the scheme. Click here to find out what they are.

Generally speaking, those who work in the following areas, CIS will apply in the following projects:

• Alterations
• Construction
• Decorating
• Demolition
• Dismantling
• Repairs
• Site preparation

The scheme does not apply to construction work carried outside of the UK or to those who are permanently employed by a Contractor. However, a business based outside the UK and carrying out construction work within the UK is within the scheme and must register accordingly.

The worker must be registered with HMRC under the CIS Scheme and obtain a UTR number (Unique Taxpayer Reference). Once the UTR has been verified, we will deduct the following amount from the workers’ gross pay.

• 20% for registered subcontractors
• 30% for unregistered subcontractors

The deductions count as advance payments towards the subcontractor’s tax and personal National Insurance. Alternatively, if workers do not want deductions to be made, they can register for Gross payment status online.

CIS is an efficient scheme as Futurelink takes care of all tax deductions along with compliance, thereby leaving the worker with little other responsibilities.

The worker would still have to complete an end of year self-assessment (tax return) and contribute National Insurance (Class 2 & 4). In most cases, the worker will receive a tax refund in event of doing so.

The deadline for submitting the paper return is 31st October, if the worker submits the electronic tax return, the deadline is the 31st January.

Business’s and workers can face substantial fines should they not adhere to the rules and deadlines that are associated with the Construction Industry Scheme.

Missing CIS return deadlines can result in the below penalties:

– 1 day late = £100
– 2 months late = £200
– 6 months late = £300 or 5% of the CIS deductions on the return, whichever is higher
– 12 months late = £300 or 5% of the CIS deductions on the return, whichever is higher

Businesses & Contractors could also be penalised for incorrectly giving the wrong employment status for a subcontractor which can result in fines up to £3000.

Futurelink can help by eliminating the risks of potential fines and protecting worker’s self-employed status.