As a contractor or self-employed business owner, you are obliged to complete an annual Contractor Industry Scheme (CIS) tax form for any and all subcontractors under your employment. This mandatory form is an important document that must be submitted to secure future tax payments of all sub-contractors, as well as their National Insurance.
If you’re stuck on this form, we’ve compiled 6 easy steps to help you through it. This guide is full of useful information that will help the process along a lot quicker.
1. Note the Exceptions
First off, let’s recognise some of the instances you WON’T have to submit a CIS tax return. If you only specialise in the following respective industries you are exempted from this process:
- Carpet laying
- Construction material factories
- Delivery service
- Surveying and architecture
- Any non-construction-related service in or around the construction area (even if it’s a service to the workers)
- Hiring out of scaffolding
If any of these industries apply to you, call the HMRC and confirm that you do not qualify for a CIS tax return.
2. Set Aside Time
Remember that filing a CIS tax return is a time-consuming process. If you don’t have the time to follow this process thoroughly—or if you simply don’t know how to complete CIS tax return, contact one of many trusted CIS tax return services to follow through on the process on your behalf.
But perhaps you want to do it yourself. If so, remember that you have a deadline for filing. So, be sure to plan your filing process at least a month ahead of the deadline, to prevent any penalties.
3. Register with HMRC
Before you can begin the process of filing your CIS tax return, you will have to register with HM Revenue and Customs (HMRC). This helpful online registration will identify you to the service helpdesk, and also generate a Unique Tax Reference number which you will need for filing.
4. Get Your Unique Tax Reference
If you don’t receive a UTR number, contact the service desk and ask for it. This number is completely unique to your company. Without it, your CIS tax form will be rejected, which will incur a penalty from the HMRC.
Keep this unique tax reference number handy during the entire CIS filing process. It’s the single most distinguishing detail of who you are and what your business’ tax obligations are.
5. Include Interest in Your Income/Losses Calculation
You’ll be doing a calculation of your income and your losses. You will also add your business expenses and payment deductions from any contractors working for you during that period. But another important detail to add is the interest earned on your bank accounts or business investment accounts. Failure to include this important detail may result in an inaccurate calculation of your CIS tax obligations.
6. File on Time
Most importantly, don’t file past the deadline. Remember that HMRC will fine you for any late submissions, so avoid this by filing your CIS tax return on time.