E-BOOK
CIS Explained
The Construction Industry Scheme from both sides, for the contractor taking the deduction and the subcontractor it comes off. Eight chapters, about ten minutes.
- Eight chapters, four for each side of the scheme
- Why verifying after the first payment is too late to fix
- Where CIS suffered belongs, and what happens when it goes elsewhere
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Who this book is for
Anyone in construction who is deducted from, deducts from others, or does both at once, and has been running on what somebody told them on site.
You pay subcontractors
Chapters two to four are yours. Verifying before the first payment, calculating the deduction on the labour alone, and the monthly return with the date that does not move. Including the nil return, which is the most common CIS penalty there is.
You are paid under deduction
Chapters five to seven. Registering so it is twenty per cent rather than thirty, splitting invoices so the deduction lands on the labour only, keeping the statements that prove what was taken, and whether gross payment status is worth having.
You are a contractor and a subcontractor at the same time
Very common, and the two sides are accounted for completely differently. What you deduct is money you hold for HMRC. What is deducted from you is tax paid on account and belongs on your balance sheet.
FACTS
The deduction is on the labour, and only the labour
Materials, VAT, plant hired in, consumable stores, fuel other than for travelling, prefabrication and any CITB levy deducted all come off first. On a £4,000 invoice with £2,500 of labour the deduction is £500, not £800. Do it on the VAT-inclusive total and the error is £460.
8 chapters
Both sides of the same scheme
£993
HMRC’s own CITB levy example, worked through
FACTS
CIS suffered is not an expense
It is tax paid on account, in advance, on your behalf, and belongs on the balance sheet until it is set against what you owe. Put it through the profit and loss and your profit is understated by the whole amount, and then you claim the same money again as a credit.