Common mistakes when dealing with Construction Industry Scheme (CIS)

As CIS accountants, we help you to navigate the complexities of the Construction Industry Scheme (CIS) on your behalf. The CIS, implemented by HM Revenue and Customs (HMRC), is designed to regulate tax obligations within the construction industry and ensure compliance among contractors and subcontractors. However, despite its intention to streamline processes and enhance transparency, dealing with the CIS can be a daunting task, prone to potential pitfalls.

In this blog post, we will explore some of the most common mistakes that you will encounter when operating under the Construction Industry Scheme. By shedding light on these stumbling blocks, we aim to equip you with the knowledge and insights necessary to sidestep these errors.

Not verifying subcontractors’ status

Before you can pay a new subcontractor, it is important that you verify their status with HM Revenue and Customs (HMRC).

By verifying them, you will;

  • Confirm that they are registered for the Construction Industry Scheme (CIS)
  • Confirm what rate of deduction to use or if you can pay them without making any deductions.

If you need to verify a subcontractors’ status, then read our blog post “How do you verify your status as a subcontractor

Not applying the correct deduction rate

When you pay a subcontractor, you will usually make some deductions from their payments. This rate can vary depending on the subcontractor.

By verifying the status of a subcontractor (see above), you will be able to confirm what deduction rate (if any) to use.

Not filing returns on time

It is important that you file your CIS tax return on time to avoid any penalties. If you need help to file your returns, then do not hesitate to contact us.