Construction Industry Scheme – Helpful Remnders For Subcontractors
Here are some hints and tips for employers who also operate as a subcontractor.
Payment and Deduction Statements
When you receive payment from a contractor and a deduction is made, the contractor must provide you with a Payment and Deduction Statement (PDS).
Contractors need to provide you with the PDS within 14 days of the end of the tax month, so no later than the 19th of the month following the month of payment. These statements can be provided each time you are paid, if payments are made more frequently. The PDS can be in electronic format, providing both you and the contractor agree to this, and you are able to store and print it. A contractor is not obliged to provide a PDS if you have been paid gross, but many do as it is good practise.
It is important that you keep these statements as you will need them to help you to complete your tax returns. HMRC can charge a penalty if you don’t keep adequate records so if you lose a PDS or it is mislaid you will need to ask the contractor for a copy which should then be marked ‘duplicate’.
Gross Payment Status
To avoid having to claim a repayment for overpaid CIS deductions, you can apply
for gross payment status, providing your business passes the qualifying tests. This means contractors will pay you without making any deductions, and you will pay any tax and National Insurance due after the end of the tax year, when you send in your Self-Assessment tax return if you’re a sole trader or partner, or your Corporation Tax return, if you are a Limited Company.
You can request gross payment status when you register for CIS. Or, if you have already registered for CIS, you can apply for gross payment status online, as follows:
- Log in with your Government Gateway ID
2. From ‘Your tax account’, go to ‘Other services’
3. Choose ‘Construction Industry Scheme – Subcontractors’.
Employer Payment Summary (EPS)
If you’re a limited company subcontractor, and don’t have gross payment status you should off-set any CIS deductions taken from your income as a subcontractor against your monthly or quarterly payments to HMRC.
To do this, enter the total amount of CIS deductions taken from your company’s income during the month on your EPS, which is due by the 19th of the month. Your payment and deduction statements will help you to ensure the information submitted is accurate, but if you do make a mistake you need to send a further EPS with the correct year-to-date figures.
You should then reduce your monthly or quarterly payments to HMRC by the amount of the deductions, so you won’t have to claim a CIS repayment after the end of the year. Make sure you keep a record of amounts set-off, using the CIS132 or a similar record.
CIS for subcontractors – Friday 29 June at 13.00
If you operate as a subcontractor, you can register to join a live broadcast of the CIS for subcontractors’ webinar, to learn about registering including gross payment status, deduction rates, and repayment claims.
CIS for contractors – Monday 25 June at 14.00
For further support and advice about working as a contractor, please register online to join a live broadcast of the CIS for contractors’ webinar in June 2018. You can learn more about how the scheme works, including CIS Returns, verifications and deductions, and receive answers to your questions during the live broadcast.
You can also sign up for future webinars and emails about CIS, and watch recorded versions of both the CIS for subcontractors and CIS for contractors webinars online at Webinars and emails on the Construction Industry Scheme.
