In detail view of knowing what is CIS Tax Return?
Stands for Construction Industry Scheme, the CIS concept was brought to limelight by the HM Revenue and Customs or the HMRC. This was done for minimizing the tax evasion by the deduction of the tax taken from the subcontractors. Before getting details, let’s know in brief how the contractors work.
It is the contractors who often tend to hire independent subcontractors for associating with them on the different assigned projects, rather than hiring a number of staff members. So, if you are in the construction industry, CIS is one of the complex areas for business negotiation. When you are filing for CIS tax return, you need to get in touch with the experts for seeking the help. It is the professional accountants who will help in performing the CIS return for you.
For who is CIS applicable to?
It is applicable to the contractors and subcontractors as mentioned above. It also includes the sole traders, companies or partnership areas that are involved in the construction industry. Not only this, the businesses that do not fall the under construction area but are some way or the other involved in such works like local authorities, housing associations and property developers, tend to spend more than £1 million or might be even more for complying with CIS.
How does CIS work for the contractors?
If you are paying the subcontractors for the completion of the work of construction, or you are spending the amount for money stated before, you will be termed as the contractor under the CIS. So, in the meanwhile, while you are paying your subcontractors, you need to be sure of them and get verified. That means you ought to check whether or not they are registered under the HMRC, and this can be done online.
You will need to keep the track of the things that have been occurring throughout the financial year, may it be the CIS or related services like VAT return services for small business. You need to get in touch with the certified accountant who will be able to perform the work for you and will be guiding you through the right pathway.
What are the types of work that fall under construction tagline?
To answer the question, they are groundwork, a general building that including plastering roofing and so on, alterations, repairs as well as demolition. Stating that is covered by CIS, there are their specific areas where you will not be entitled to file CIS return and that includes a profile of architecture and surveying, scaffolding hire, carpet fitting, delivering materials and working on construction sites on a non-construction related job
How will the professional experts work for you?
As a contractor, it is important to keep the apt record keeping that terms under CIS. It is important for keeping the track of the record of the gross amount paid to the subcontractor, the amount of the tax that got deducted, costing of the materials, verification number of the subcontractor, if possible. Now, it is your role to provide a written statement to your subcontractor if you have deducted tax under CIS.
If the subcontractor has applied for the gross payment status successfully, then there will be no deduction of the taxes. They will have to deal with their own tax payments at the end of the financial tax year. To receive the payments with no tax deduction at source, the subcontractor needs to go through 3 tests that include –
- Business – the construction work is US based and the business should have a bank account to conduct the proceedings.
- Turnover – The least turnover of an individual subcontractor £30,000 with a higher minimum requirement for partnerships and companies.
- Compliance – The subcontractor has no outstanding tax returns or payments due to HMRC.
- If the subcontractor is successful in the above tests, which respect every year, they might be able to receive the gross payments from their contractor.
What are the requirements for subcontractors under CIS?
If you are a subcontractor, there is no sort of obligation for you to be a part of the CIS, the tax savings can be done through registration. But you need need to keep proper records if you tend to register so that you will be able to opt for the apt CIS tax return to file that will also show the direct costing of your materials.
You must provide your contractor with correct information so that your status can be verified. If you do not do the same, you might be fined up to £3,000 for stating false declarations in this respect, with penalties also being charged for failing to provide the appropriate records when necessary.
Final Words –
Subtilis Accountancy has associated with the best and professional experts who are there to provide you with the right solution to all your accounting and tax filing needs. The experts are there to listen to all the required factor for the proper financial setting and formulation of your business. May it is CIS tax return or any other financial outlook of your business, the experts are there to meet and greet your needs without any hassle.