CIS Returns UK — Construction Industry
Scheme Compliance Made Simple

All businesses that work in the construction industry as contractors (paying subcontractors for construction work) must register for CIS. Subcontractors who receive payment from contractors should also register — registered subcontractors have 20% deducted (rather than 30% for unregistered), and registered subcontractors can apply for gross payment status (0% deduction). CIS covers construction, alteration, repair, demolition, installation and civil engineering work.

CIS deductions suffered by subcontractors can be offset against PAYE liabilities (if you employ staff) or reclaimed via your Self Assessment tax return (sole traders) or Corporation Tax return (limited companies). If your CIS deductions exceed your tax liability, HMRC will issue a refund. We track all CIS deductions on your behalf and claim the maximum refund in your annual return. Refunds can be substantial — some clients recover £10,000+ annually.

Gross payment status allows subcontractors to receive payments from contractors without any CIS deduction — significantly improving cash flow. To qualify, you must pass HMRC’s business, turnover and compliance tests: your business must have a UK bank account, your turnover must meet the minimum threshold (£30,000 for sole traders, £100,000+ for companies depending on size), and your tax compliance record must be clean for the previous 12 months. We assess your eligibility and manage the application process.

Late CIS monthly returns trigger automatic HMRC penalties: £100 for returns filed up to 2 months late, £200 for 2-6 months late, plus additional daily charges and tax-geared penalties for very late returns. The penalties are per return — so a year of late filing can cost over £3,000. We file CIS returns for all clients by the 19th of each month without exception and have never incurred a CIS late filing penalty.

Yes — as a CIS contractor, you must verify every new subcontractor with HMRC before making any CIS payment to them. Verification determines the correct deduction rate to apply. You verify via HMRC’s CIS online service or by phone. Once verified, you don’t need to re-verify the same subcontractor unless they’ve been inactive in your scheme for 2 years. We handle all subcontractor verification as part of your CIS service.

Contractors must verify every new subcontractor with HMRC before making the first payment — using HMRC’s online CIS service or telephone helpline. Failure to verify means you must deduct at the higher unverified rate of 30% (rather than the standard 20% for registered subcontractors). Paying without verification at all is a compliance breach that attracts HMRC penalties.

CIS deductions only apply to the labour element of a subcontractor’s payment — not to the cost of materials separately stated on their invoice. Incorrectly deducting CIS from the full invoice amount (including materials) over-deducts tax from the subcontractor and creates a mismatch in HMRC’s records. We correctly identify the labour-only amount for every CIS payment.

Even in months where no payments are made to subcontractors, contractors must file a nil CIS return by the 19th — or notify HMRC that they are an inactive contractor. Failing to file nil returns results in automatic £100 late filing penalties accumulating month by month — often discovered only when HMRC issues a penalty notice months later.

Many self-employed subcontractors are unaware that CIS deductions suffered — the 20% or 30% taken from their payments by contractors — create a tax credit that reduces their Self Assessment liability. If their CIS deductions exceed their income tax bill, they are entitled to a refund. We claim every CIS credit in every client’s Self Assessment return, often generating substantial refunds.