What is Construction Industry Scheme?
Construction Industry Scheme or CIS, in short, refers to the set of special rules issued by the tax office for handling payments made by contractors to subcontractors for construction work. This applies to contractors, subcontractors, and any organizations that spend a huge amount of money on construction, even though it is not their main work. The Construction Industry Scheme was set out by HM Revenue & Customs (HMRC) to cater to self-employed contract workers in the construction industry. As a result of the amendment made to section 44 of the Income Tax (Earnings & Pensions) Act, there are now stricter rules surrounding the employment status of contractors, with the burden of proof over a lack of supervision, direction, or control now resting with the agency. If your firm or company is involved and is mixed up in construction, you should register it under CIS. The significant first step is for you to identify whether you belong to the group of contractors or subcontractors because different rules apply and relate to each category, most importantly some distinct terms and regulations delineate your transactions for your business. CIS payroll can be done in-house by a contractor, our outsourced to a payroll company specializing in this scheme. The process involves between the contractors and subcontractors is made easy through CIS payroll services; contractors who are paying their subcontractors will process CIS payments at the same time as the rest of their payroll. Any deductions under CIS are paid to HMRC. A return is then submitted showing what was paid to subcontractors.
What are CIS Payroll Services?
CIS payroll refers to the payments made between contractors and subcontractors under the government’s Construction Industry Scheme or CIS. Contractors and subcontractors may encounter CIS payroll service companies through the course of their professional lives. CIS Payroll services protect and security contractors and subcontractors alike who seek to ensure HMRC rules relating to CIS are followed correctly.
CIS Payroll Services may include but are not limited to:
- Registering contractors for the CIS scheme with HMRC
- Verifying subcontractors with HMRC
- producing statements of payments & deductions on both monthly and quarterly basis
- Completing the monthly return and submitting it to HMRC
- Offering general advice concerning all aspects of CIS
CIS requires legal and tax obligations for both contractors and subcontractors, and thus applies to individuals and organizations at both ends of the spectrum. Micro businesses, small enterprises, partnerships, companies, or any businesses that fit into the criteria and standards for contractors have the need by law to enroll in the CIS and for those that qualify as subcontractors are not legally obliged to enroll but if they decided to, of course, they could enjoy and savor the benefits and advantages that it offers. The most important note to take is that CIS payroll services can be a great help to you and your business. That is why it is significant to understand whether you are covered.
In conclusion, whether you qualify as a contractor or subcontractor, in any possible and great ways, CIS will have an impact on you and your business differently.