CIS (Construction Industry Scheme) is a UK-based system whereby tax is deducted from payments made to subcontractors in construction. The scheme covers all construction work including jobs such as: site preparation, alterations, dismantling, construction, repairs, decorating and demolition.
Under CIS, contractors are required to deduct tax at source. This is typically 20% for registered subcontractors or 30% for those not registered. This deduction is made before the subcontractor is paid and is based solely on the labour element of the subcontractor’s invoice, not the cost for materials.
A return is then submitted on or before the 19th of each month to HMRC advising them of the deductions as they count as advance payments towards the subcontractor’s income tax and National Insurance.
We are able to assist with registration, verification, calculating and submitting the CIS return and producing certificates for your contractors.
The Domestic Reverse Charge (DRC) was introduced in March 2021 to help tackle VAT fraud in the construction sector. It shifts the responsibility for accounting for VAT from the supplier to the customer for certain construction services, meaning the contractor pays the VAT directly to HMRC rather than the subcontractor including it on their invoice.
Alongside the Construction Industry Scheme (CIS), this approach helps reduce tax evasion by ensuring both income tax and VAT are properly controlled throughout the construction supply chain.
We can support you in assessing how the DRC may impact your cash flow as well as ensure that staff involved in invoicing and VAT accounting fully understand how the reverse charge operates.
We combine our specialist CIS knowledge with practical, hands-on support to help make compliance straightforward and stress-free. You stay compliant, your projects stay running smoothly.
We provide tailored bookkeeping, accounting, and tax services and we’re proud to partner with Xero cloud accounting software. Whether you’re a start-up, an established business, or a business preparing for sale, we work closely with SMEs at every stage of your journey.
Thinking about switching to Xero? Our experienced team will guide you every step of the way, from data migration and account setup to personalised training, making the transition simple and stress-free. We also offer ongoing support, so you can use Xero’s features with confidence as your business grows.
To find out more, please select one of the business structures above to explore the services we offer for companies, sole traders, partnerships, those working in the construction industry, and individuals in particular support with Self-Assessment Returns.