Construction Industry Scheme (CIS) is easier
If your business operates in the construction industry, tax will be deducted from payments due to you from contractors, unless you obtain CIS gross payment status.
Obtaining and keeping gross payment status has been difficult in the past as a business could lose that status by underpaying tax by a tiny amount, or by sending in a PAYE return a day late. The good news is that the rules for meeting the tax compliance part of the gross payment status test have been relaxed from 6 April 2016.
Now all you need to do is:
- file all the monthly CIS returns due
- file the self-assessment tax return for the business (Income or Corporation Tax)
- pay CIS tax and PAYE due to HMRC
- meet all requests by HMRC for the supply of accounts and other information about the business
All CIS returns must now be filed online by the 19th of each month. If there are no payments to report there is no need to file a nil return.
You must, however, verify with HMRC the identity of all the subcontractors you pay before you pay them. You can do this through the CIS online service on gov.uk. This now has an improved matching system, so it should cope with minor spelling differences in a subcontractor’s name. If the online verification doesn’t work, you can call the CIS helpline: 0300 200 3210. But be warned: HMRC want to withdraw that telephone service in April 2017.