Construction Industry Scheme (CIS) Frequently Asked Questions - Payments and Returns
Payments & Returns
- What do I need to do if I have submitted a return using HMRC's 'Online Return and Forms - CIS' for the wrong month and year?
- What happens if a contractor has paid a subcontractor in the current or previous two tax years, but not for construction operations?
- How long would a subcontractor's details continue to be on the returns if no further payments were made to him or her?
- If a contractor starts to submit the monthly return online, will they stop receiving paper returns?
- Will contractors be able to add subcontractors to their online returns even if they do not need to verify them?
- Partners in a business may be on holiday in the 14-day period when the return should be submitted. If they do not meet the deadline they will not be able to submit the return by the deadline and will incur a penalty. Are there other solutions?
- Will contractors who report a nil return by telephone be given a confirmation number?
- I sign the monthly contractor return but have no responsibility for hiring/establishing employment status. What advice would you give?
- I currently receive payments gross. How can I ensure this continues?
- How will a contractor know if a subcontractor with gross payment status has it withdrawn at a later date? Will the contractor be protected?
- How does the exception in regulation 23 operate for payments under PFI contracts?
- Why is page two of the return full of 'X's?
- Why has my return got a subcontractor with a verification number on it when I haven't verified anyone yet?
What do I need to do if I have submitted a return using HMRC's 'Online Return and Forms - CIS' for the wrong month and year?
Contact the CIS Helpline on 0845 366 7899 and request that the submitted return is corrected to reflect the correct return period. You will then need to send a paper return for the current period. The Helpline can issue you with a blank monthly return. Following this you will be able to submit your returns electronically but care must be taken to ensure that the return period shown is correct. Guidance for other types of mistakes can be found in our guidance on how to correct monthly return and payment errors.
Q. What happens if a contractor has paid a subcontractor in the current or previous two tax years, but not for construction operations?
A. The subcontractor will have to be verified in the usual way, as previous payments did not fall within the provisions of the Construction Industry Scheme.
Q. How long would a subcontractor's details continue to be on the returns if no further payments were made to him or her?
A. If no payments are made the names will stop appearing on the pre-populated return after three months.
Q. If a contractor starts to submit the monthly return online, will they stop receiving paper returns?
A. HMRC will stop issuing paper returns once the first electronically filed return is received.
Q. Will contractors be able to add subcontractors to their online returns even if they do not need to verify them?
A. Yes.
Q. Partners in a business may be on holiday in the 14-day period when the return should be submitted. If they do not meet the deadline they will not be able to submit the return by the deadline and will incur a penalty. Are there other solutions?
A. These are the possible ways of dealing with this:
- they need to arrange their business affairs in such a way that a responsible person, perhaps their agent, is able to complete and sign the return for them.
- they can file online from wherever they are.
- they can file an early nil return.
- they can make their return early by completing a blank manual return form rather than waiting for the pre-populated version.
More information about contractor returns can be found in the fact sheet The Monthly Return – advice for subcontractors CIS346 (PDF 35K).
Q. Will contractors who report a nil return by telephone be given a confirmation number?
A. No confirmation number will be issued but nil returns will be voice recorded if taken by the contact centre.
Q. I sign the monthly contractor return but have no responsibility for hiring/establishing employment status. What advice would you give?
A. If you are signing on behalf of your employer you, or your employer, will need to put in place internally a process whereby you can be satisfied that employment status issues have been duly considered before you sign the return.
Q. I currently receive payments gross. How can I ensure this continues?
A. You must meet all your tax obligations including submitting all returns and payments on time. HMRC will run regular checks to ensure that you are complying with all obligations. If you have a problem meeting a tax payment, you should contact HMRC about the difficulty in advance of the due date rather than simply failing to make the payment.
Q. How will a contractor know if a subcontractor with gross payment status has it withdrawn at a later date? Will the contractor be protected?
A. The contractor will be notified by HMRC if a subcontractor has lost gross status and the contractor will then have 30 days to make changes to their payments. The detail is set out in sections 3.17 - 3.19 in the booklet CIS Guide for contractors and subcontractors (CIS340).(PDF 585K).
Q. How does the exception in regulation 23 operate for payments under PFI contracts?
A. The exception in regulation 23 only applies to the payment made by the public body to the PFI contractor. This contractor will usually be a group of interests put together for the particular project, commonly referred to as a special purpose vehicle (SPV).
Excepting the payment by the public body removes the need for the SPV, which will usually contain non-construction parties, to register for CIS. It also removes the need for the public body to operate CIS on payments which might continue under the contract for 25 or 30 years.
Once the payment is in the hands of the SPV, any payments which are made by the SPV under contracts relating to construction operations will fall within CIS. The SPV therefore needs to be registered in CIS, as a contractor. Some payments made by the SPV, possibly to financial institutions, will be outside the scheme. But, the SPV will need to operate the scheme on all those which are made under contracts relating to construction operations. That will include on-going payments which might be made for facilities management, if the contract includes any element of construction operations. For example, if a contract provides largely, say, for the provision of on-site security, catering and general cleaning, but also includes the repair and maintenance of the buildings, then any payments made under that contract fall within CIS, because of those construction operations within the contract.
Clearly, contractors who receive payments from the SPV under construction contracts, then operate CIS on the onward payments to their sub-contractors.
Q - Why is page two of the return full of 'X's?
A - Page 2 of a return will be completely overwritten with 'X's where we do not have any data to prepopulate. You can enter subcontractors on page 3 and (if necessary) on continuation sheets.
(Prepopulation only occurs when the subcontractor has been paid within the previous 3 months and a voucher has been submitted within that period (subject to the processing of vouchers.) If subcontractors are on the CIS333 list it does not mean they will be on the return unless they have been paid within the last 3 months. The CIS 333 only shows those sub contractors that do not need to be verified when the contractor pays them.)
Q: Why has my return got a subcontractor with a verification number on it when I haven't verified anyone yet?
A: All subcontractors who were migrated onto the new system were given a “verification” number. This will show on the system with a date of 6/4/07 but can safely be ignored.
