What is the Construction Industry Scheme?
The Scheme sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry and certain other businesses. Brief overview: There are no CIS4, CIS5 or CIS6 cards. CIS vouchers (CIS23, CIS24 and CIS25) are no longer used. Instead contractors must now send a monthly return to the revenue even if no subcontractors were used for that month. A written payment statement must be given to each subcontractor every month from whom you have made a deduction. Every month the contractor must make a declaration that none of the subcontractors are employees – The penalty for getting this wrong is £3,000 per return – Contracts must be in place. There are 3 types of payment status – Gross, net of standard deductions (20%) and now a higher rate deduction (30%) for those subcontractors that HMRC cannot verify. A subcontractor must be verified before they are paid to ensure they are registered for CIS and to confirm which payment status
