The Construction Industry Scheme
HMRC has launched new online forms for sole traders and partnerships claiming repayments of subcontractor deductions during the current tax year. There is separate HMRC guidance for sole traders, partnerships and companies. Limited companies registered outside of the UK must register with HMRC’s non-resident specialist CIS team before any construction work begins.
Contractors are defined as those who pay subcontractors for construction work or spent an average of more than £1m a year on construction over a three-year period. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered. The alternative turnover limit to register a company as a CIS subcontractor, or apply for gross payment status is currently £100,000.
There are penalties for late submission of CIS contractor monthly returns. The penalties increase the longer the returns are outstanding. Online filing of monthly returns has been compulsory since April 2016.