CANALITIX ACCOUNTANTS have extensive experience assisting Clients in the construction to comply with their accounting and HMRC reporting requirements.
HMRC requires contractors to register for the Construction Industry Scheme (CIS) and to verify subcontractors so they can determine the correct CIS deduction rates to apply to subcontractor payments.
Subcontractors registered with HMRC pay the standard 20% deductions, as opposed to the higher rate of 30% for unregistered subcontractors. In addition, some subcontractors are approved for gross payments where they have a history of filing and paying taxes on time.
Unlike PAYE, CIS deductions are taken from the subcontractors’ gross income without considering their annual personal allowance.
HMRC treats CIS deductions as advanced payments of income tax and national insurance. As a result, subcontractors are normally due tax rebates after the end of the tax year.