Monthly returns and record keeping under CIS

If you're a contractor under the Construction Industry Scheme (CIS) there are certain rules you'll need to follow. For example, you have to tell HM Revenue & Customs (HMRC) each month about all the payments you've made to your subcontractors within the scheme. You do this by making a monthly return.

To help HMRC check you're making your monthly returns correctly you're expected to keep records of your payments to subcontractors. You have to keep these records for a certain length of time so that HMRC can check them when it needs to.

This guide will help you if you're a contractor who needs to make monthly CIS returns. It explains how to go about making your return and tells you what happens about late returns, errors and months when you haven't paid any subcontractors. It also gives a basic overview of the records you must keep.

On this page:

What you need for making your monthly returns

To make your monthly returns you'll need to get hold of the right paperwork - or software - and have the right information to hand so you can fill in the return. Then you'll need to send it back to HMRC on time.

Making electronic returns (recommended)

HMRC recommend making your monthly returns electronically as this is the easiest and most efficient method. To do this you'll need one of the following:

  • Internet access and a web browser so you can use HMRC's free CIS Online service
  • commercial software that can handle electronic CIS filing
  • access to Electronic Data Interchange (EDI) and the appropriate systems

If you want to send HMRC your monthly returns online you'll need to register for its CIS Online service. Once you've done this you'll be able to send your return almost instantly through its website any time of the day or night.

You'll also be able to do this if you want to use commercial CIS software. You'll need to choose software that can work with HMRC's systems. You can see a list of CIS software that HMRC has tested on its website.

If you're a large contractor with a lot of subcontractors you might decide to use EDI. You'll need to register for EDI - if you haven't already - and set up your systems to use this method.

Once you start making your returns online, regardless of which method you choose to do this, HMRC will stop sending you paper returns.

Register for the CIS Online service

See a list of recognised CIS software packages

Obtain the registration form for EDI (PDF 65K)

Read about how to use HMRC's CIS Online service

Making paper returns

When you register with HMRC it will send you a contractor pack that includes a blank copy of form CIS300 - the monthly return form. Once you're registered HMRC will send you a paper return towards the end of each tax month. A tax month starts on the sixth day of one month and ends on the fifth day of the following month.

HMRC will save you some time by filling in the returns sent to you with some of the information it has already got about your business. Once HMRC knows about the subcontractors you use it will save you more time by 'pre-populating' the return forms with details of subcontractors you've recently verified or included on a return.

However you choose to file your monthly returns, you'll also need to have the right information to hand when you fill in each return.

To make your monthly return by post you'll need to send it in good time to:

Construction Industry Scheme
Liverpool
L75 1HL

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Checks and information for your monthly returns

Whatever method you use to make your monthly returns, the first thing you should do each month is check any pre- populated information HMRC has put onto the form. You'll need to:

  • make sure that the details for your own business are right
  • check that any details about your subcontractors are right
  • add information about any new subcontractors who aren't already on the form

Once you're happy that the details are complete and correct, you'll need to:

  • put in details of all the payments you've made to each subcontractor during the last tax month
  • remember to enter details of the gross amount you have paid to each subcontractor, that is, the amount before you have taken off any deductions that you are required to make
  • include details of any deductions you've made from each payment

Details of payments in the month to all of your subcontractors must be included on the return, whether they are paid gross or under deduction.

The return includes a declaration that your subcontractors are properly self-employed and were not taken on under terms that would make them employees. It also includes a declaration that you verified all the subcontractors on the return if you needed to. When you're happy that everything's correct, sign the form where you're asked to if it's a paper one or confirm it if it's electronic.

Find out how to pay your subcontractors under CIS

Read about your obligations as a CIS contractor

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When to send your monthly returns to HMRC

Your monthly return must always reach HMRC no later than 14 days after the end of the tax month it's for. This means the return must get there no later than the 19th day of each month.

For example, if you're making a return to cover payments you made in the tax month from 6 May to 5 June, it must reach HMRC by 19 June.

Make sure you always get your returns in on time. If you don't, you'll get a penalty. Send HMRC your return in good time even if there are still some issues about it that you're discussing.

If you're making a paper return, be sure to:

  • sign it - if you don't HMRC will send it back and you could miss the deadline
  • post it in good time - always allow for postal delays

Holiday periods

Sometimes, the deadline for sending your return may coincide with a holiday period. These are the possible ways of dealing with this:

  • you need to arrange your business affairs in such a away that a responsible person, perhaps your accountant, is able to complete and sign the return for you
  • you can file online from wherever you are
  • you can file an early nil return (but only where a nil return is appropriate for that month)
  • you can send your return early by completing a blank manual return form rather than waiting for the pre-populated version

Authorising an accountant to deal with HMRC for you

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CIS nil returns, late returns and mistakes

From time to time you might have a month when something unusual happens with your monthly return.

CIS nil returns

If you're a CIS contractor you have to make a CIS return every month - even if you didn't pay any subcontractors during the last tax month. If this happens, you have to make a 'nil return'. A nil return is not a return stating that you have only paid gross subcontractors in the month – it's a return stating that you have paid no subcontractors at all. If you normally send in a paper return, just fill in the section for nil returns and send it to HMRC as normal.

If you normally make your returns electronically you can still use this method to make a nil return.

Alternatively, you can also make a nil return by calling HMRC's CIS Helpline. HMRC will be unable to give you a confirmation number but the call will be voice recorded.

CIS Helpline

If you have no PAYE/NICs/CIS payment due

If you have a PAYE (Pay As You Earn)/National Insurance Contributions (NICs)/CIS scheme and will not be making any PAYE/NICs/CIS payment for any tax month or quarter, you must let HMRC know that the month or quarter will be a nil payment declaration by using the link below. You will need to do this before the payment due date to avoid being issued with a payment reminder.

Inform HMRC that no PAYE/NICs payment is due

Inactivity

If you know you're not going to be paying any subcontractors for a while you should let HMRC know. HMRC can stop sending you monthly return forms for a period of up to six months. But whenever you do start paying subcontractors again you must be sure to send HMRC a monthly return immediately when it is due to avoid being charged a penalty. Although you have told HMRC about a period of inactivity’ you must still tell HMRC that no payments are due for every month that you won’t be making payments to HMRC.

CIS late returns

If you don't get your monthly return to HMRC by the deadline you'll get an automatic £100 penalty. If you don't then send in your return for some time you’ll get more penalties.

You'll need to make nil returns on time too to avoid a £100 penalty.

Read about how HMRC charges penalties for late contractor returns

Mistakes on CIS returns

If you make a mistake on a paper return before you send it in, just put a line through it and then put in the right information.

It's easy to correct mistakes you make before you submit a return online - just delete whatever's wrong and put in the right details.

If you realise you've made a mistake on your return after you've sent it, what you need to do next depends on the type of mistake it is. Sometimes you'll need to contact HMRC to get it sorted out, but at other times it may be possible to sort things out between you and your subcontractor. If you need to contact HMRC about a mistake on your return call the CIS Helpline as soon as possible.

CIS Helpline

You'll get more information about how to deal with different types of mistake in HMRC's guide to sorting out monthly return and payment errors under CIS.

Find out how to deal with mistakes on your monthly CIS return

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Record keeping for CIS contractors

If you're a construction industry contractor HMRC will expect you to keep certain records. You'll need to keep details of:

  • the gross amount of each payment you make to a subcontractor - excluding any VAT
  • the amount of any deduction you made from a payment before you gave it to the subcontractor
  • if you made a deduction, the amount of any materials costs - excluding any VAT

HMRC will check these records from time to time - just like it checks employers' PAYE records.

You must keep your records for at least three years after the end of the tax year they're for. If HMRC asks to see them you'll need to make them available and provide any facilities needed to look at them. HMRC may ask you for full sized copies.

You can archive your records on an imaging system like microfiche as long as you keep an unchanged image of the originals.

Obtain booklet CIS340 'Construction Industry Scheme - guidance for contractors and subcontractors' (PDF 268K)

Check if you're a contractor or a subcontractor under CIS

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