Mainstream CIS contractor obligations include keeping records and telling HMRC about certain changes to your trading circumstances.
All CIS contractors working under the Construction Industry Scheme (CIS) must keep proper and accurate records of:
- Any deductions made from payments to subcontractors.
- The gross amount of each payment after being invoiced by subcontractors (excluding any VAT).
You must also keep records of the costs of materials that subcontractors invoice you for – if you made deductions (excluding any VAT).
As a CIS contractor you will need to keep these details on file for at least three (3) years after the end of the tax year that they relate to. HM Revenue and Customs can ask to inspect CIS records at any time.
Note: Being unable to show your CIS records to HM Revenue and Customs, when asked to do so, can result in a fine up to £3,000.
Notifying HMRC about CIS Changes
HM Revenue and Customs (HMRC) would need to know if certain circumstances change, such as if:
- You change your address (either as an individual contractor or as a business).
- You change the legal structure of your business (e.g. from a sole trader to a limited company – or vice versa).
- A contractor dies.
- You have ‘multiple contractor status‘ and you take on the business operation of another contractor. In this case, you must tell HMRC about changes within ninety (90) days.
If You Stop trading or Stop Using Subcontractors
If at any time you stop trading or using subcontractors you will need to:
- Inform HM Revenue and Customs (HMRC).
- Stop filing your monthly Construction Industry Scheme (CIS) reports.
Follow this procedure even if you stopped using subcontractors as a temporary arrangement. A typical example might be due to using employees of your own to carry out some construction work.
ALSO IN THIS SECTION
File CIS Returns | Explaining the process of telling HMRC each month about subcontractor payments.
CIS Deductions and Payments | How to make subtractions and pay subcontractors for construction work.