skip to navigationskip to main content

Phone: 0141 248 7411 

Email:

Choosing a Service

Choosing an accountant that matches your needs

Sectors

Robb Ferguson provides specialist advice for...

icon-free-consultation

Free Initial Consultation

Understanding your accountancy requirements

Request a Callback

Lets talk at a more convenient time for you

Understanding the CIS

Newsletter issue - October 2014

If you are a contractor in the construction industry it is essential that you deduct the right amount of Construction Industry Scheme (CIS) tax from payments you make to subcontractors.

A common misunderstanding about the CIS is that deductions of CIS tax only have to be made from labour costs. This is not the case, but it may work out like that in practice.

HMRC's instructions are clear, the contractor must deduct the following cost items as listed on the subcontractor's invoice before applying the appropriate rate of CIS tax (20% or 30%) to the net amount:

  • VAT charged;
  • CITB levy paid;
  • materials;
  • consumable stores;
  • fuel used - except for travelling;
  • plant hire; and
  • manufacturing or prefabricating materials.

If the contractor does not deduct the right amount of CIS tax they remain liable for that tax to HMRC, unless the contractor can persuade HMRC to demand the CIS tax directly from the subcontractor.

In a recent case the judge was very critical of the company directors and internal accountant for not taking the trouble to read the CIS regulations and taking care to apply them. This is a bit harsh, as the regulations are not easy to understand. However, you should at least make sure that anyone who operates the CIS within your company reads the guidance concerning CIS on the HMRC website. If you are unsure about any aspect of the CIS ask us for clarification.

Not everything is equal – true. But maybe being equal is simply not good enough?

Our Philosophy

We’re a dedicated team which strives to provide success to our clients in regards to all their accountancy needs.

Meet our team