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Click here to e-mail your query or to arrange a free initial meeting to discuss the CIS scheme.
Are you ready for the new Construction Industry Scheme ?
Registration Cards
The CIS4 registration card is being abandoned under the new scheme, but failing to register will mean deduction at a higher rate of 30% or 40% instead of 18%. Make sure your details are in place on the new HMRC register and that you keep your new registration number available to provide to your contractor.
Currently registered ?
If you are already registered under the current scheme, your details should automatically transfer across to the new scheme. Make sure your current registration card is not temporary and does not run out before April 2007.
New requirements for gross payment (no tax)
Changes have been made to the requirements to be paid gross. You will need to show:-
1. your business is carrying out construction work or providing labour in the UK and has a bank account, and
2. your turnover excluding VAT, and after you have paid for materials is at least £30,000 (per partner or Director if a limited company), and
3. in the previous 12 months (with some exceptions) you have been up to date with your tax returns, and tax, NI, PAYE and CIS payments.
New verification process
Verification will be the new process for determining the correct tax rate for subcontractors. Contractors will contact HMRC who will check that the subcontractor is registered and HMRC then tell the Contractor what rate of tax to use. This will not be necessary if the subcontractor has appeared on the contractors returns in the current or two previous tax years.
Verification is available by telephone (0845 366 7899) or via the internet.
Status changes
Three months notice will be given by HMRC if payment status changes from gross to net to give the subcontractor time to appeal.
Monthly returns for contractors
There will be no more CIS23/24/2 vouchers and CIS36 annual return. However contractors will be required to submit a monthly return 14 days after the end of the tax month. (i.e. the first new return covers 6/4/7 to 5/5/7 and needs to be submitted by 19/5/7). Penalties will apply to late returns but a 6 month period of grace has been allowed. (But this may affect 3. above !).
Monthly returns will also include a declaration that the worker is self employed rather than employed. This is in itself a complex area, but one which West Norfolk Taxation Service can help with.
Monthly returns can be sent in by filling in the paper return or submitted online.
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