Construction Industry Scheme
CIS Accountant for Subcontractors and Contractors
Most subcontractors overpay tax and wait months to get it back. We reclaim what HMRC has over-deducted, file your returns on time, and keep your CIS position straight all year.
Under the Construction Industry Scheme, contractors deduct 20% from your payments before you see them — 30% if you are not registered. That deduction is an advance payment against a tax bill nobody has calculated yet, so it is very common to have paid far more than you owe by the time the year ends. We work out the real figure, claim the difference back, and get the refund moving.
We act for subcontractors and for contractors running their own CIS scheme, across London, Finchley, Enfield and the rest of North London — bricklayers, electricians, plasterers, groundworkers, roofers, and the small firms that engage them.
CIS refunds claimed
The 20% deducted at source is usually more than you owe. We reclaim it.
Monthly returns filed
Contractor returns filed on time — the £100-a-month late penalty starts on day one.
Gross payment status
We assess whether you qualify to be paid without deduction, and apply.
Expenses claimed properly
Tools, materials, travel, protective clothing, use of home.
If you are a subcontractor
Your contractor deducts tax at source and hands it to HMRC. Nothing in that process accounts for your personal allowance, your expenses, or the fact that you paid for your own tools and travel. Those only come into it when your self-assessment return is filed — which is why so many subcontractors are owed money.
- Registration with HMRC as a CIS subcontractor, so you are deducted at 20% rather than 30%
- Self-assessment return prepared with every allowable expense claimed
- Refund claim submitted and chased through to payment
- Deduction statements checked against what the contractor actually reported
- Advice on whether incorporating would leave you better off
Keep every deduction statement your contractor gives you. Without them HMRC will not accept the deductions you are claiming credit for, and reconstructing a year of payments from bank entries is slow and expensive.
If you engage subcontractors
Running a CIS scheme means verifying every subcontractor with HMRC before you pay them, deducting at the rate HMRC gives you, issuing deduction statements, and filing a monthly return by the 19th. Miss a return and the penalty is £100 immediately, rising with each month it stays outstanding — regardless of whether any tax was due.
We run the whole cycle for you: verification, deduction calculations, statements to your subcontractors and the monthly return to HMRC. If you have fallen behind, we deal with the catch-up filings and argue the penalty position where there is a reasonable excuse to argue.
The employment status question
CIS is not a way of turning an employee into a subcontractor. HMRC looks at how the work is actually controlled, whether the worker can send a substitute, and who carries the financial risk. Getting this wrong is expensive for the contractor, because HMRC will pursue the PAYE and NIC that should have been operated. If you are unsure where a working relationship sits, we will review it before it becomes a problem.
Gross payment status
Deduction at source is a cash-flow problem before it is a tax problem. Twenty per cent of every payment is held back for a year, and for a subcontractor with materials and wages to fund, that is the difference between taking work and turning it down.
Gross payment status stops the deduction entirely — you are paid in full and settle the tax through your return. It has to be applied for and it has conditions: turnover above a threshold excluding materials, a business run through a bank account, and a clean compliance history. That last one is where applications fail, and it is the one you can do something about in advance.
It is also lost as well as won. HMRC reviews the status, and a run of late returns or late payments can take it away — which is a much bigger event than the penalties that caused it.
Materials are not deducted from
The twenty per cent comes off labour, not off materials. If the invoice does not separate them, the contractor is entitled to apply the deduction to the whole amount — and a great many do, because they have nothing else to go on.
Split every invoice: labour, materials, plant hire. It costs nothing and on a materials-heavy job it changes the deduction substantially. Keep the purchase invoices too, because the figure has to be the actual cost rather than a stated one.
If you pay subcontractors: the monthly return
Most of the CIS material written for the trade is about being paid. The obligations that actually generate penalties belong to the contractor doing the paying, and they run monthly whether or not there is anything to report.
Verify before the first payment
Every new subcontractor has to be verified with HMRC before you pay them, and the verification tells you which rate to deduct — the standard rate, the higher rate for someone not registered, or nothing at all where they hold gross payment status. Guessing is expensive in both directions: deduct too little and the shortfall is yours to make good, deduct too much and you have taken money from someone who has to wait a year to recover it.
The return is due monthly, including nil months
The return covers the tax month to the 5th and is due by the 19th. A month with no payments still needs a nil declaration unless you have told HMRC you are inactive. The penalty for a late return starts immediately and escalates, and because the obligation is monthly a single overlooked period can be repeated a dozen times before anyone notices — which is how a small administrative slip becomes a four-figure penalty.
And you must give the subcontractor a statement
Each subcontractor is entitled to a payment and deduction statement for every month in which you deducted from them. It is what they will use to reclaim. Not issuing them is a breach in itself, and it also guarantees a difficult conversation later when their figures do not match yours.
Frequently asked
How long does a CIS refund take?+
HMRC typically processes a refund within a few weeks of the return being filed, though it can take longer if they open a check. We file as soon as the tax year ends on 5 April rather than waiting for the January deadline, which is the single biggest thing that gets the money back sooner.
I have lost some of my CIS deduction statements. Can I still claim?+
Often yes. We can request the information from the contractor, and HMRC holds the monthly returns the contractor submitted. It is more work than having the statements to hand, but a missing statement does not automatically lose you the claim.
Should I be a sole trader or a limited company?+
It depends on your profit level, whether you want gross payment status, and how much administration you are willing to carry. A company keeps the CIS deduction inside the business rather than against your personal tax, which changes the cash-flow picture. We will run both positions on your actual numbers.
What is gross payment status and can I get it?+
It lets contractors pay you in full with no deduction, so you settle your tax through your return instead. You have to pass a turnover test, a compliance history test and a business test. We assess whether you qualify and handle the application.
How do I stop 20% being deducted?+
Apply for gross payment status. You need turnover above the threshold excluding materials, business banking, and a clean record of filing and paying on time — that last condition is the one that decides most applications, and it is worth putting right before you apply rather than after a refusal.
Should tax be deducted from my materials?+
No. The deduction applies to labour only. If your invoice does not separate labour from materials, the contractor can apply it to the whole invoice, so itemise every one and keep the purchase invoices to support the figures.
Do I have to file a CIS return in a month when I paid nobody?+
Yes, unless you have told HMRC the scheme is inactive. A nil return is still a return, and the penalty for missing one starts from the day after the deadline. Because the obligation repeats monthly, an overlooked period tends not to be a single penalty — it is the same penalty several times over before anybody spots it.
What happens if I deduct at the wrong rate?+
If you deduct too little, HMRC will generally look to you for the difference rather than to the subcontractor, so the cost falls on the contractor who failed to verify. If you deduct too much, the subcontractor is out of pocket until they can reclaim it, which can be the best part of a year. Verification takes minutes and removes both risks; it is the single most worthwhile habit in running the scheme.
My subcontractor says he should be paid gross. How do I check?+
By verifying him, which is the only reliable answer — HMRC tells you the rate to apply. Gross payment status has to be applied for and can be withdrawn, so someone who held it last year may not hold it now. Take the verification result rather than the assurance, and keep the record of it.
Local to you
Chartered accountants, just up the road.
We are based in Finchley and work across North London. Come in, call, or do the whole thing by email — whichever suits you.
Or call 07480 281548