Does your business operate in the construction industry? A CIS Accountant in Norfolk can make sure you adhere to the regulations of the scheme and that your CIS tax returns are accurate. If you think you’ve overpaid your CIS tax return and may be due a rebate, Worthwhile Accountancy can get your money back for you.
Understanding What The Construction Industry Scheme (CIS) Is?
The Construction Industry Scheme (CIS) is a set of rules by HMRC governing payments made by contractors to subcontractors in the construction industry. It aims to ensure that subcontractors pay the correct amount of tax.
Does it apply to you?
It doesn’t matter if you are a sole trader, a partnership, or registered as a limited company. You must register for the CIS scheme with HMRC if you are a contractor who pays subcontractors for construction work. Subcontractors who carry out construction work should also register, even if they’re self-employed. Even though subcontractors don’t need to register, not registering will result in higher deduction rates.
The HMRC website states that you must register as a contractor if:
- you pay subcontractors to do construction work
- your business does not do construction work but you have spent more than £3 million on construction in the 12 months since you made your first payment
What is a contractor?
A contractor is a business that pays subcontractors to carry out construction work.
What is a subcontractor?
A subcontractor is a business that carries out construction work for a contractor. Subcontractors are often skilled tradespeople who carry out specific aspects of the project, e.g. electricians, plumbers, under the direction of the contractor.
You may even find that your business comes under both brackets, you subcontract your services as well as employ the services of others. This is why so many businesses turn to an accountant and CIS accounting software to assist with CIS invoices and deduction statements.
What are your obligations under CIS as a contractor?
Comprehensive Norfolk CIS Accountancy Services
Worthwhile Accountancy offers a complete range of CIS accounting services designed to support contractors and subcontractors throughout Norfolk. Our services are tailored to streamline your financial operations, ensure compliance, and maximise your profitability.
Whether you’re a large contractor or a self-employed subcontractor, our CIS accountants in Norfolk have the expertise to meet your specific needs.
Our Norfolk CIS accountancy services include:
Understanding CIS Deduction Rates
When a contractor makes payments to a subcontractor under the Construction Industry Scheme (CIS), they must make deductions from those payments. These deductions are then passed on to HMRC as advance payments towards the subcontractor’s tax liability.
The three different CIS deduction rates are:
- Standard Rate (20%): The standard rate applies to subcontractors who are registered with HMRC for CIS but are not registered for Gross Payment Status. This means 20% of the payment (excluding materials) is deducted.
- Higher Rate (30%): The higher rate is applied when a subcontractor is not registered with HMRC for CIS. In this case, 30% of the payment (excluding materials) is deducted.
- Gross Payment Rate (0%): Subcontractors with Gross Payment Status receive payments without any deductions. This status is granted by HMRC to subcontractors who meet certain criteria.
It’s crucial for contractors to apply the correct deduction rate to avoid penalties. We can help you verify subcontractors’ CIS status and ensure accurate deductions.
Gross Payment Status: What It Means for Subcontractors
Gross Payment Status allows subcontractors to receive payments from contractors without any CIS deductions being made. This can significantly improve cash flow for subcontractors.
To obtain Gross Payment Status, subcontractors must meet certain criteria set by HMRC, including:
- Tax Compliance: Subcontractors must have a good tax payment record.
- Business Tests: They must pass certain business tests, such as having a bank account and appropriate insurance.
- Turnover Test: They must meet a turnover test, which varies depending on whether they are a sole trader, partnership, or limited company.
The turnover test is exclusive of VAT and materials. It is as follows:
- £30,000 or more for sole traders
- £30,000 for each partner in a partnership or a minimum of £100,000 for the whole partnership
- £30,000 for each individual director of the company, or a minimum of £100,000 for the entire company
Additionally, if your company is ‘controlled by 5 people or fewer’, your company must have an annual turnover of at least £30,000 for each of them.
Why Norfolk Construction Businesses Choose Us for CIS Accounting
Worthwhile Accountancy is a trusted provider of expert CIS accounting services, specifically tailored to meet the unique needs of construction businesses in Norfolk. We understand your challenges, from managing complex CIS regulations to ensuring accurate CIS deductions and timely CIS Returns Services.
Here’s why contractors and subcontractors across Norfolk rely on our specialist CIS accountants
- Accuracy and Compliance: Your full compliance with the Construction Industry Scheme (CIS) regulations, minimising the risk of penalties and HMRC disputes. Our meticulous approach to CIS deductions and reporting gives you peace of mind.
- Efficient CIS Returns Services: Preparation and submission of your monthly CIS returns, saving you valuable time and administrative burden. We streamline the process, ensuring accuracy and timely filing.
- Expert CIS Deductions Management: Accurate calculation and management of CIS deductions are crucial. We ensure the correct deductions are made, providing clear statements for subcontractors and accurate reporting to HMRC.
- Specialist CIS Accounting Software Support: Worthwhile Accountancy are proficient in leading CIS accounting software, enabling us to provide efficient and accurate financial management. We can help you set up, implement, and use software to simplify your CIS processes.
- Proactive Advice and Support: Going beyond basic compliance, offering proactive advice on tax planning, cash flow management, and other financial aspects relevant to your construction business.
- Local Knowledge, Personal Service: As a Norfolk-based firm, we have in-depth knowledge of the local construction industry and its specific requirements. You’ll receive personalised service from a team that understands your business.
With Worthwhile Accountancy, you gain a dedicated partner committed to the financial success of your construction business.
CIS Accounting for Your Business
“We are a company based in Manchester, and Worthwhile Accountancy has supported us since 2019 on a remote basis. This works really well as they are always quick to respond to our needs/issues and we feel they are part of “our team”. Nothing is too much trouble and they keep us well informed of government changes, payment deadlines etc etc.”
FAQs
Contractors who pay subcontractors for construction work must register with HMRC. Subcontractors who carry out construction work also need to register, even if they’re self-employed.
Contractors must verify subcontractors with HMRC, make appropriate CIS deductions, provide payment statements, and submit monthly CIS returns.
CIS deductions are usually made at a standard rate of 20% or a higher rate of 30%, depending on the subcontractor’s tax status.
CIS returns must be submitted to HMRC monthly, by the 19th of the following month.
Accurate cash flow management is crucial in the construction industry. We can help you with forecasting, invoicing strategies, and managing CIS deductions to optimise your cash flow.
We can advise you on suitable CIS-compliant accounting software based on your business needs and provide support with implementation and training.
For online Self Assessment submissions, HMRC typically processes refunds within 2-8 weeks. Paper submissions can take significantly longer. Our efficient process aims to get your claim submitted accurately and promptly.
Yes, generally, you can claim a CIS tax rebate for up to four previous tax years, provided you haven’t already filed your Self Assessment for those years or need to amend them. Contact us if you need help with a historical claim.
It’s crucial to obtain these. You should contact the contractors you worked for and request copies. Without these, it can be difficult to prove the deductions made. We can advise you on the best way to pursue missing statements.
While it’s not legally mandatory, engaging a specialist CIS Accountant like Worthwhile Accountancy is highly recommended. We ensure accuracy, maximise your claim by identifying all allowable expenses, and handle the complexities of HMRC, giving you peace of mind and saving you time.
No, claiming a refund for tax already deducted does not negatively impact your status or future payments under CIS, provided your tax affairs remain compliant.
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“Handling your own accounts and taxation can be complex and time consuming. Lack of experience can lead to serious problems in your business, which can easily be avoided. By taking expert advice, any discrepancies are spotted early and dealt with before they become a problem.”
Nicky Nevison – Worthwhile Accountancy