Businesses in the construction industry operate under different rules to other businesses – they must be registered and operate under the Construction Industry Scheme.
It sets out how to pay to subcontractors and there are strict rules that contractors must adhere to. Failure to follow these rules will result in large penalties being levied on the contractor.
You can check whether CIS applies to your business and whether you count as a contractor, subcontractor (or both) under the scheme by following this link http://www.hmrc.gov.uk/cis/intro/decide-if-cis.htm
Contractors
If your business does fall within the scope of the CIS you have certain obligations: you must register with the scheme; before you pay anyone you must check whether your subcontractors are registered with HMRC and every month you must submit a monthly return to HMRC. Failure to do this by the monthly deadline will result in penalties being levied.
The penalties are large. Failure to file your monthly return on time will reward you with a £100 penalty, this penalty will be levied every month until you submit the return. If you fail to send the return for the following month you will be sent another penalty, which is also levied every month until submitted.
It is easy to see how quickly the penalties can build up:
| Period of Return | Return due | Return finally submitted | Period late | Penalty |
| 5 May | 19 May | 26 May | 1 week | £100 |
| 5 June | 19 June | 26 July | 1 month + 1 week | £100 + £100 |
| 5 June | 19 July | 26 July | 1 week | £100 |
| Total Value of Penalties | £400 |
We can take this worry from your shoulders leaving you free to focus on your business. Between us we have over 19 years of expertise in the construction industry so you can feel safe in our care.
Subcontractors
If you are a subcontractor you need to register with HMRC. If you don’t register contractors who pay you will have to deduct 30% from your payments. So if you’re intending to work within the construction industry it is essential you register with HMRC before you start.
This registration is in addition to registering for Self Assessment. If you have already registered for Self Assessment you can register for CIS by calling HMRC’s CIS helpline on 0300 200 3210, please visit the following link for more information