CIS Contractor Obligations in the UK
As a rule, CIS contractors pay subcontractors for carrying out construction work. Besides registering with HMRC, you have other responsibilities as a Construction Industry Scheme (CIS) contractor.
Often, CIS contractors are construction companies and building firms. They can also be government departments or local authorities (referred to as 'clients').
This section explains the rules that CIS contractors must follow and their obligations in the construction industry.
You will need to register as a contractor with the Construction Industry Scheme (CIS) if:
- You make payments to subcontractors for doing construction work.
- Your business does not carry out construction work but you usually spend over £1 million per year on construction.
Your obligations as a CIS contractor would still apply whether you are a sole trader, in a business partnership, or you own a limited company.
The CIS scheme covers all types of construction work carried out in the United Kingdom. It includes jobs such as site preparation, making alterations, dismantling, and demolition.
CIS contractor regulations also include UK territorial waters up to the 12-mile limit. Check who the scheme covers if you are unsure whether you need to register (see below).
CIS Contractor Rules You Must Follow
- As a contractor, you must register with HM Revenue and Customs for the CIS scheme before taking on any subcontractors.
- You may need to employ the person in 'employee status' instead of subcontracting the work to them. You can get a penalty if you should have taken them on as an employee instead (see below).
- You will need to verify subcontractors with HM Revenue and Customs (HMRC). Checking the registration of a subcontractor with CIS is one of the roles of CIS contractors.
- As a rule, you will pay the workers and make deductions from any subcontractor payments. The deductions you make count as advance payments towards a subcontractor's tax and National Insurance bill. You need to pay this money to HMRC.
- You must file monthly returns and keep full CIS records to avoid getting a financial penalty.
- You would need to notify HM Revenue and Customs if there are any changes to your company (e.g. address or business structure).
Follow UK Rules for 2019 Updates!
Note: Read CIS 340 guidance for further details on the payment rules to subcontractors for construction work. It also explains the duties of contractors and subcontractors within the Construction Industry Scheme (CIS).
ALSO IN THIS SECTION
Businesses Covered in CIS Scheme
The Construction Industry Scheme (CIS) includes mainstream contractors and deemed contractors. Check who is covered by CIS and what kind of work qualifies as exceptions for contractors.
How to Register for CIS Scheme
Taking on, and paying, subcontractors means you must register for HMRC CIS scheme. Get expert help with registering for CIS and information on verifying subcontractors.
CIS Deductions and Payment
As a CIS contractor, you can make deductions and pay subcontractors for construction work. The section explains how to make a CIS deduction and pay deductions to HMRC.
Filing CIS Monthly Returns
As a mainstream CIS contractor, you must file monthly returns online with HM Revenue and Customs. You can also use commercial CIS software but there are penalties for filing late returns.
CIS Record Keeping
You must keep CIS records for three (3) years and tell HMRC about changes in circumstances. Check what to do if you stop trading or stop using subcontractors.
What You Must Do as a Construction Industry Scheme (CIS) Contractor in United Kingdom