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If you're a contractor under the Construction Industry Scheme (CIS) you need to submit monthly returns to HM Revenue & Customs (HMRC) listing all payments you've made to subcontractors. You also need to verify new subcontractors. You can do both electronically using CIS Online.
CIS Online is secure and convenient. You can use it 24 hours a day, seven days a week.
If you're a contractor, you can access CIS Online using:
If you're a large contractor with many subcontractors, the EDI service or good commercial software might be most suitable. If you're a small contractor using fewer than 50 subcontractors each month, you might opt for HMRC’s free software - or their recognised commercial software suppliers.
If you're an accountant or an agent who files CIS returns on clients' behalf you can also use CIS Online.
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As a contractor under CIS there will be times when you will need to 'verify' your subcontractors. This means checking with HMRC to see whether they are registered with them.
You can verify up to 100 subcontractors in one batch using HMRC’s online service. This means you don't have to deal with so many verification numbers.
You need to make a monthly CIS return within 14 days of the end of the tax month you're reporting on - even if there are no subcontractor payments to report. If HMRC get your return late you'll receive an automatic penalty of at least £100.
The quickest and most secure way of submitting your monthly return is by using CIS Online as you don't have to worry about your return being lost or delayed in the post. In most cases it should get to HMRC almost instantly, however, in busy periods such as around the 19th of the month there might be a delay acknowledging its receipt. Exceptionally, in a very small number of instances it could take up to 24 hours. If this happens, please don’t keep trying to resend the return as this can cause multiple returns for the same period.
You can use CIS Online whenever it's most convenient for you - it's available 24 hours a day seven days a week.
You need to sign up through the HMRC website to use any of their online services - including CIS Online. These are the main steps you'll need to follow to register if you're registered for CIS but not for CIS Online:
On the HMRC website and choose ' Sign up for CIS Online' from the 'Do it online' box. Have the following details about your business to hand:
Select 'Register' on the Welcome page.
If you've already registered for CIS select Sign Up for HMRC Online Services.
Confirm that you have read the HMRC Online Services terms and conditions.
Enter your name and email address.
Create a password of 8 to 12 digits. Include both letters and numbers to make it more secure. You'll need to remember your password and keep it safe and secure.
Make a note of your User ID shown on the screen.
Enter your Employers reference number and Accounts Office reference number.
Wait for your 'Activation Code' (also known as Activation PIN) to arrive through the post. HMRC will send this to you and it should arrive within seven days.
Use your 'Activation Code' to activate the CIS online service.
If you already have a User ID and password to use one of HMRCs other online services you can add CIS Online as an extra service, as follows:
EDI is an electronic system that can handle large amounts of data.
If your business deals with hundreds of subcontractors each month you may find the most efficient way to submit monthly returns is to use the EDI service. Payroll bureaux and accountants who process CIS returns or verifications for several contractors may also find EDI the most effective way of submitting electronic returns.
Before you can use EDI you must complete the EDI registration form and return it to the EDI Live Online Services Office. The address is shown on the registration form.
If you deal with fewer than about 50 subcontractors each month you can use HMRC's own free software to make your monthly returns online or you can use third party commercial software.
If you deal with about 50 subcontractors or more you may want to use commercial software that supports online filing. There are a number of software packages available that can integrate with your own accounting and payroll systems to reduce the amount of work you need to do.
If your business has developed its own software, you can use it to file online if it meets HMRC's software specifications.
HMRC has taken steps to make sure their online services are secure. They constantly check for security problems and have put in place security measures.
When you register to use CIS Online HMRC send you the details you need to activate the service by post. They go to the address HMRC has for your business on their records. The activation details are only valid for 28 days.
All the data you send and receive through CIS Online is transmitted through a 128 bit secure socket layer (SSL) connection. This makes a secure link between your computer and HMRC's server and encrypts all the data - meaning no one else can read it. You can tell when SSL is working because a small padlock icon appears on your web browser's status bar.
HMRC is a responsible data user. They have to follow the rules for privacy and data protection laid down by the Data Protection Act.
You might sometimes make a mistake when you're filling in a monthly return using CIS Online. For example, you might:
If you realise you've made a mistake after you submitted the return you can contact HMRC either by phone or by post to put right any errors. You can't make corrections electronically.
The quickest way to correct errors is to call HMRC's CIS Helpline. Make a note of the date and time you called - and the changes you reported - in case there's any dispute later on.
You can also tell HMRC about corrections by writing to your local HMRC Office. Be sure to include the following details so they can trace your CIS return:
If HMRC think you made the errors deliberately or because you were negligent, they may give you a penalty for an incorrect return. This could lead to you losing your gross payment status if you're also a subcontractor.
If you have any questions about CIS Online you can call HMRC's CIS Helpline.
Many accountants offer payroll and CIS Online services for their clients. So you could ask an accountant to submit your monthly CIS returns online for you.