If you’re a Construction Industry Scheme (CIS) subcontractor, it’s important to know what steps you need to take to claim CIS refund from HMRC. Being registered with CIS means that even though deductions have been made by contractors throughout the year, you are still responsible for paying the correct tax and National Insurance for your business. Contractors will provide you with a monthly statement of what they’ve paid you and the deductions they’ve made. Sole traders and partners will need to include this information on their Self Assessment tax return, while limited companies will need to claim these deductions back through their monthly payroll scheme. Remember to keep records of your claims and be prepared to provide evidence if requested by HMRC.
Overview
As a Construction Industry Scheme (CIS) subcontractor, there are several important things you must do to ensure that you comply with the tax regulations. From registering with the CIS to getting paid, paying tax, and claiming back deductions, this article will guide you through the process. We’ll also cover how to obtain gross payment status, what you need to include in your annual review, and the changes you need to report. Additionally, we’ll discuss the responsibilities of sole traders and partners, as well as limited companies. Lastly, we’ll provide guidance on what to do if you do not have all your CIS statements and how to contact HMRC for assistance.
How to Register
Registering with the Construction Industry Scheme (CIS) is the first step you need to take in order to comply with the tax regulations as a subcontractor. To register, you will need to provide your personal information, including your name, address, and Unique Taxpayer Reference (UTR). You will also need to provide information about your business and its activities. Once you have submitted your registration application, HM Revenue and Customs (HMRC) will review it and notify you once you are registered.
Get Paid
Once you are registered for CIS, you will need to ensure that you are getting paid correctly by contractors. Contractors are required to provide you with a monthly statement that details the payments made to you and any deductions they have made on your behalf. It is important to review these statements thoroughly and ensure that they are accurate. If you have any concerns or discrepancies, you should contact the contractor to resolve the issue promptly.
How to Get Gross Payment Status
Obtaining gross payment status can be beneficial for subcontractors as it allows you to receive payments in full without any deductions for tax and National Insurance. To qualify for gross payment status, you must meet certain criteria set by HMRC. These criteria include submitting your tax returns and payments on time, having a good compliance record, and meeting certain turnover requirements. If you meet these criteria, you can apply for gross payment status through the CIS online service. HMRC will review your application and notify you if your application is successful.
Annual Review
As a CIS subcontractor, you are required to complete an annual review to confirm that the information held by HMRC is up to date and accurate. The annual review is an opportunity for you to report any changes to your circumstances, such as changes to your business name, address, or trading status. It is important to complete the annual review by the deadline specified by HMRC to avoid any penalties or issues with your CIS registration.
Changes You Need to Report
As a CIS subcontractor, it is important to report any changes to your circumstances to HMRC as soon as possible. These changes may include changes to your business name, address, trading status, or contact details. Reporting these changes promptly ensures that HMRC has the most up-to-date information and helps to avoid any complications or penalties. You can report changes online through the CIS online service or by contacting HMRC directly.
When You’re Registered with the Construction Industry Scheme (CIS)
Responsibility for Paying Tax and National Insurance
When you are registered with the CIS, you are responsible for paying the correct tax and National Insurance for your business. This means that even if deductions have been made by contractors throughout the year, you are still required to ensure that the appropriate taxes are paid.
Monthly Statements from Contractors
Contractors are required to provide you with monthly statements that detail the payments made to you and any deductions they have made on your behalf. It is important to review these statements carefully and ensure that they are accurate. If you have any questions or concerns regarding the statements, it is recommended to reach out to the contractor for clarification.
How to claim CIS refund as a sole traders or partners
As a sole trader or partner, you will need to send in your Self Assessment tax return at the end of the tax year as usual. It is important to record the full amounts on your invoices as income and any deductions made by contractors in the ‘CIS deductions’ field. HMRC will calculate your tax and National Insurance bill and deduct any deductions made by contractors. If you still owe tax after these deductions, you will need to make the payment by January 31 following the end of the tax year. If you are entitled to a tax refund, HMRC will process the refund and provide the necessary payment.
How to claim CIS refund as a Limited Company
If you have gross payment status as a limited company, you will need to declare all of your income in your Corporation Tax return as usual. If you have paid CIS deductions, you must claim CIS refund through your company’s monthly or quarterly payroll scheme and not through your Corporation Tax return. If at the end of a PAYE period in the same tax year, CIS deduction exceeds the PAYE liability, the excess is carried forward to the next month
It is important to submit your monthly Full Payment Submission (FPS) and Employer Payment Summary (EPS) to HMRC as usual, ensuring that you enter the total CIS deductions for the year to date.
At the end of the tax year, HMRC will deduct your total CIS deductions from your total PAYE tax and National Insurance liabilities. If there is a balance owed to you HMRC will repay it by the usual due date.
If You Do Not Have All Your CIS Statements
Requesting Replacement Copies
If you have not received all the CIS statements you need from a contractor, you can request replacement copies from them. It is recommended to reach out to the contractor directly and provide them with your name, address, Unique Taxpayer Reference (UTR), the contractor’s name and address, their tax reference (if known), and the dates of the payments or the tax months when the contractor paid you. This will help the contractor identify the necessary statements and provide you with the replacement copies.
Contacting HMRC
If the contractor you are working for has stopped trading or you have not been able to obtain all your CIS statements, it is important to contact HMRC for assistance. You will need to provide them with your name, address, Unique Taxpayer Reference (UTR), the name and address of the contractor, their tax reference (if known), and the reason why you do not have the statements or duplicates. HMRC will review your request and provide guidance on the necessary steps to take.
In conclusion, as a CIS subcontractor, it is important to understand and comply with the tax regulations. Registering with the CIS, getting paid correctly, paying tax, and claiming back deductions are all essential steps in ensuring that you meet your obligations. Additionally, maintaining accurate records, reporting changes promptly, and seeking assistance when needed will help to ensure a smooth and successful experience as a CIS subcontractor. Remember to always consult with HMRC or a tax professional if you have any questions or concerns.
