Construction Industry Scheme (CIS) Accounting
Accounting For Construction Industry Scheme
Welcome to QA Construction Industry Scheme Accounting!
Thinking about setting up your construction business or working for someone else as a sub-contractor?
As one of the UK’s premier online accountants we service each of these areas and we can discuss your requirements with you in greater detail to help you decide which may be the most appropriate structure for your business. So please give us call!
Experience & Expertise
Our team at QAccounting has been supporting Construction Industry Scheme businesses with their accounts and bookkeeping for over decades and have been rated 5 stars by hundreds of happy clients. Come and see what all the fuss is about and get a quick quote today!
What is included in QAccounting’s
Construction Industry Scheme Accounting?
We take great pride in our accounting services for Construction Industry Scheme, assisting numerous professionals across the country in managing their accounts and staying abreast of their tax obligations. Here’s what is included:
We Take No Commission
If you are CIS registered and due a tax-reclaim, QAccounting charge a flat fee unlike other providers who take a significant percentage of your refund in commission. That means we’ll charge the same amount even if your reclaim is vast!
Award Winning Services
It’s true, we’ve won an award or two! Our services are backed by award winning technology, and our business thrives on making the lives of our customers easier. We’ve been rated 5 stars by hundreds of customers and are proud to support CIS contractors.
So long as we have the information we need we will normally prepare your return within 24 hours from receiving the information required to complete it. That means you can put your feet up and let our accountants take care of the hard work for you!
UK Based Team
We are an online UK accountant with offices in Leicester and Aberdeen and are available 5 days a week to help you benefit from your CIS Reclaim. You can call us, email us or chat to us online to get your self-assessment sorted!
Rhino Trade Insurance
We partner with expert insurance specialists Rhino Trade Insurance, offering unbeatable insurance prices for almost any trade. From Public Liability Insurance, Tools Cover and Accident & Sickness policies, our parters at Rhino Trade Insurance will ensure that anyone working in construction or the trades has their insurance requirements sorted.
Understanding UK Tax Obligations for Construction Industry Scheme Businesses:
Navigating the tax landscape for your construction business or being a sub contractor can be challenging. Here’s a quick guide to some essential terms and concepts:
What Happens If You Work in the Construction Industry?
If you work in the construction industry then HMRC has created additional rules that you need to be aware of called the Construction Industry Scheme (CIS). This scheme has been designed to try and reduce the frequency of construction workers who are either: not submitting tax returns, or failing to make self-assessment payments when they are due.
The scheme works by requiring the end client, referred to as the “Contractor”, to deduct tax at source (i.e. similar to an employer) equivalent to:
- 20% of Invoiced (Labour) Value – Where the worker, referred to as the “Sub-Contractor” HAS registered with HMRC under the scheme.
- 30% of Invoiced (Labour) Value – Where the worker, referred to as the “Sub-Contractor” HAS NOT registered with HMRC under the scheme.
- Sub-contractors can also apply to HMRC directly to be paid GROSS under the scheme, so that all tax will be assessed at the year end, but certain criteria must be met to qualify.
Given the huge difference in tax rates it is clearly essential that workers who are “Sub-Contractors” register with HMRC in advance of starting work which is covered by the scheme, or as soon as possible afterwards, ideally before raising an invoice!
Additionally, if your business also employs other sub-contractors then you must also register under the scheme as a “Contractor” as well.
One of the most important areas you must consider before you can start out as a charity or social enterprise is the structure that will best suit your objectives both now and in the future, and how this structure will impact key areas such as:
- Personal Liability – Where the risk of personal liability is a significant consideration for management then an incorporated legal structure is generally preferred.
- Governance & Management Structure – Each of the different types of venture outlined below have different governance and management structures.
- Funding – Where the primary source of funding will be grants from funding bodies then a charity structure is generally preferred. Likewise, where the primary source of funding will be from external investors then a share ownership structure is generally preferred. In other circumstances a structure limited by guarantee is often preferred.
But ultimately all of these areas should be considered together before making any final decisions. And the most essential aspect is to consider this at the outset, as changing structure in the future can often be complex and expensive.
Scope of the Scheme
The Construction Industry Scheme (CIS) covers most construction work, including: site preparation, building, decorating, and refurbishment.
For larger organisations such as: housing associations, government bodies, etc, there are also “deemed contractor” rules to include organisations which, are not specifically in the construction industry but, have spent more than £3 million on construction in the last 12 months.
However, there are a number of specific exclusions from the scheme, including:
- Work paid for by a charity or trust
- Work paid for by a governing body or head teacher of a maintained school on behalf of the local education authority
- Work on the subcontractor’s own property and worth less than £1,000 excluding materials
- Architecture and surveying
- Scaffolding hire (with no labour)
- Carpet fitting
- Delivering materials
- Work on construction sites that is clearly not construction (e.g. running a canteen)
Responsibilities of a CIS Contractor
As a “contractor” you have a number of initial and ongoing responsibilities, including:
- Registering for the scheme online before you take on any subcontractors. Once you have registered HMRC will supply you with the following key employer information:
- Unique Taxpayer Reference (UTR)
- HMRC Payment Office Reference
- HMRC Employer Reference
- Making an accurate determination as to whether each worker is an employee or a sub-contractor. This is important because HMRC may later fine you if they decide you have made the wrong determination.
- Verifying each sub-contractor online before making any payments to them, to determine whether they are registered under the scheme, and determine what rate of deductions to apply. In order to do this the sub-contractor will need to supply their own:
- Unique Taxpayer Reference (UTR)
- National Insurance Number
- Where applicable their company or partnership name, registration number, and UTR.
- Making CIS deductions at the appropriate rate (as advised by HMRC) before making payments to sub-contractors. The deductions should only be charged on the “labour” element of invoices. And sub-contractors must be provided with a payment and deduction statement, and direct payment of the net amount, within 14 days of the end of the month.
- Filing monthly CIS returns with HMRC, or notifying them that no return is due, within 19 days of the end of the month. Penalties for late filing can be quite severe.
- Paying these CIS deductions to HMRC within 22 days of the end of the month.
- Keeping accurate CIS records for all sub-contractors for at least 3 years.
- Letting HMRC know about any changes to your business, including:
- Change of address (personal or business)
- Change your business structure
- If you stop trading or using subcontractors
As a specialist CIS Accountant, QAccounting offer CIS Contractor Services which fully comply with HMRC’s monthly and annual filing requirements!
Sub-Contractor CIS Reclaims
It is essential to understand that if you are a sub-contractor that, because HMRC have collected taxes “at source” before you have deducted expenses, in most cases you will have paid too much tax! To correct this, you have the option to make a “CIS Reclaim” when you submit your next tax return, by recording the correct profit values for the year and the taxes already paid to HMRC at source. HMRC will then repay this overpaid tax to the sub-contractors once they have processed the claim, which can take many months.
Unlike most other accountants who charge clients a percentage of the tax reclaimed for providing a CIS Reclaim service, QAccouting only charge a small flat rate fee making us market leaders in this space!
Joining QAccounting is so easy, we’re surprised that you haven’t gone and done it already! To join us you simply need to complete our ‘Join Now’ form and our team will do the rest. If you are still unsure which package, you would like or need to get a quotation from us then you can use our simple ‘Get a Quote’ form to get the right package calculation and speak with one of our experts.
We have helped numerous CIS workers in getting their self-assessments prepared and their reclaims sorted on time. Let us take care of this year’s CIS Reclaim.
Don’t let the taxman scare you into not submitting your return. We will ensure that you are operating compliantly and tax efficiently whilst making the most of your reclaim.
When you deal with us you are dealing with trained, friendly UK based staff. Our team is available 5 days a week and our offices based in Leicester and Aberdeen.
We are industry leaders in accounting and tax support and want to add benefit to you and your business. We work with the best in the construction market to offer the best services.
Frequently Asked Questions
We are confident that our prices are better than elsewhere in the market. See how much you can save by switching to Rhino and get a quick quote today!
Not at all. We offer our clients the opportunity to reclaim your overpaid tax for a flat fee. That means that no commission is taken regardless of the value of your reclaim. Transparent fees mean that you have no hidden costs or hidden surprises along the way!
We certainly can! We work alongside trade insurance experts Rhino Trade Insurance. Rhino offers low cost insurance to almost all types of tradesperson, whether you are a one man plumber, a subcontractor or run a firm of builders.
We're Here to Help
If you have any questions or queries feel free to ping over an email, get a quote or pick up the phone to us today!