CIS Verification Support
As a contractor, it is your responsibility to verify every sub-contractor that works for you BEFORE you pay them. When you verify a sub-contractor with HMRC you will be advised whether the CIS (Construction Industry Scheme) deductions should be made at 20%, 30% or if the sub-contractor can be paid gross (i.e. the full invoice amount with no CIS deductions).
How to verify CIS
To verify a sub-contractor you will need to collect the following information:
If Self-Employed Individual
- Full name (or the trading name they gave when they registered for CIS)
- Personal UTR (unique tax reference number given to them by HMRC)
- National Insurance number
If trading through a Limited Company
- Company Name
- Company registration number
- Company UTR (unique tax reference number given to them by HMRC)
If they haven’t yet registered with HMRC as a sub-contractor then they will need to do so before they can be verified and before you can pay them. They can find information on how to do this here: https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor/how-to-register
How to calculate CIS
Once all of your sub-contractors have been verified you pay them. You will need to deduct CIS (at the rate confirmed by HMRC, 20% or 30%) from the labour element of their invoices only, for example:
Joe Bloggs works in January and charges you £2400 for his services between 6th Jan and 5th Feb. He is not VAT registered and did not purchase any materials. Assuming he needs standard deductions, you simply multiply his labour by 20% and deduct this from his invoice. I.E £2400 x 20% = £480 therefore payment to Joe should be £1920.
How can A4C help?
If a4c operate your CIS scheme then we can verify new sub-contractors on your behalf. If you process your own CIS returns then you can verify Subcontractors yourself via your HMRC Government Gateway or via your CIS software).
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