20-11-2019
Verifying CIS subcontractors

The Construction Industry Scheme (CIS) comprises a set of special rules for tax and National Insurance for those working in the construction industry. The scheme applies mainly to contractors and sub-contractors involved in construction. However, certain businesses that are not in the business of construction but have a significant amount of annual spend may also count as contractors.

Before making a first payment to a subcontractor the contractor must confirm that the subcontractor is known to HMRC, registered within CIS and obtain details of their payment status. This is known as 'verifying the subcontractor'. A contractor or their appropriate representative can go online to carry out this verification using a number of different methods.

The verification is necessary so that the contractor can ascertain whether or not a deduction should be made from the subcontractor's payment and, if so, at what rate. If the subcontractor is not registered for the CIS, then contractors must deduct 30% from their payments. If the subcontractor is registered, then either a 20% deduction is taken, or the subcontractor can apply for gross payment status. If the subcontractor has gross payment status, they are responsible to pay all their tax and National Insurance at the end of the tax year.

Once verified, the contractor only needs to re-verify the subcontractor if they have not paid the same subcontractor within the current, or two previous, tax years.

Source: HM Revenue & Customs | 20-11-2019

Back

Post a Comment

Your email address will not be published. Required fields are marked *

*

  • ABOUT US

    the accountancy practice kent logo

    The Accountancy Practice is a Kent based firm specialising in small and medium sized businesses. We provide a friendly, professional service and regard our smallest client as important as our largest.
  • Latest News

    09-07-2020
    Summer Statement

    The Chancellor, ... read more

    08-07-2020
    Tax Credits updates required this month

    Families and ... read more

    08-07-2020
    Reminder of businesses opening since 4 July 2020

    A reminder that ... read more

    More news

  • CONTACT US

    The Accountancy Practice
    10 Churchill Square
    Kings Hill
    West Malling
    Kent ME 19 4YU

    01732 897929

    Fax: 01732 897939
    info@theaccountancypracticeltd.co.uk


    Facebook
    Twitter
    Linkedin
  • Why choose us

    By working more closely with you than traditional accountants, The Accountancy Practice is able to gain a deeper understanding of your individual business needs. We are then on hand to support you with day to day issues and provide ongoing financial and taxation expertise. You can think of us as your virtual Financial Director.