New CIS
New Construction Industry Scheme (New CIS)
On 19 October, the Financial Secretary announced in a written answer to a
Parliamentary Question that the Government would allow the construction
industry a further twelve months, until April 2007, to prepare for the
introduction of new CIS. This announcement means that the current scheme
will continue until 5 April 2007.
From 6 April 2007 the current scheme is due to be replaced by new CIS.
The new Scheme will remove some of the administrative burden of the
current scheme and provide alternatives to the paper based processes of
CIS.
The main changes are:
There will no longer be any need for CIS cards, certificates or vouchers.
Contractors must check or 'verify' new subcontractors with HM Revenue &
Customs.
Subcontractors will still be paid either net or gross, depending on their own
circumstances, but it will be HM Revenue and Customs who tell the
contractor which treatment to use during verification, not a piece of plastic.
There will also be a higher rate tax deduction if a subcontractor cannot be
'matched' on our system. This rate will apply until the subcontractor
contacts HMRC and registers or sorts out any matching problem.
There will no longer be CIS annual returns.
Contractors must make a return every month to HM Revenue and Customs,
showing payments made to all subcontractors. This will be sent to them in
good time, and pre-populated from existing records. Contractors must
declare on their return that none of the workers listed on the return are
employees. This is called a Status declaration.
Nil returns must be made when there are no payments in any month. These
can be made over the telephone as well as via the internet or on paper, but
they must be made - there will be financial penalties for failure to submit a
return.
The vast majority of subcontractors registered under the existing CIS
rules will be transferred over to the new system and will not have to
re-register.
New subcontractors, and those that formerly held only temporary
registration cards that expired before new CIS starts, will be required to
register with HM Revenue and Customs.
On 19 October, the Financial Secretary announced in a written answer to a
Parliamentary Question that the Government would allow the construction
industry a further twelve months, until April 2007, to prepare for the
introduction of new CIS. This announcement means that the current scheme
will continue until 5 April 2007.
From 6 April 2007 the current scheme is due to be replaced by new CIS.
The new Scheme will remove some of the administrative burden of the
current scheme and provide alternatives to the paper based processes of
CIS.
The main changes are:
There will no longer be any need for CIS cards, certificates or vouchers.
Contractors must check or 'verify' new subcontractors with HM Revenue &
Customs.
Subcontractors will still be paid either net or gross, depending on their own
circumstances, but it will be HM Revenue and Customs who tell the
contractor which treatment to use during verification, not a piece of plastic.
There will also be a higher rate tax deduction if a subcontractor cannot be
'matched' on our system. This rate will apply until the subcontractor
contacts HMRC and registers or sorts out any matching problem.
There will no longer be CIS annual returns.
Contractors must make a return every month to HM Revenue and Customs,
showing payments made to all subcontractors. This will be sent to them in
good time, and pre-populated from existing records. Contractors must
declare on their return that none of the workers listed on the return are
employees. This is called a Status declaration.
Nil returns must be made when there are no payments in any month. These
can be made over the telephone as well as via the internet or on paper, but
they must be made - there will be financial penalties for failure to submit a
return.
The vast majority of subcontractors registered under the existing CIS
rules will be transferred over to the new system and will not have to
re-register.
New subcontractors, and those that formerly held only temporary
registration cards that expired before new CIS starts, will be required to
register with HM Revenue and Customs.