Basic Information About CIS Payroll You Need To Know
Construction Industrial Scheme is for contractors and Sub-contractors working for the construction industry. CIS is responsible for withholding tax and National Insurance contributions and passing them to HM Revenue and Custom. CIS is a tax that is collected.
Difference between contractor and subcontractor
You will be defined as a contractor if your business uses subcontractors for construction works, or you have an average of over 1 million annually for the past three years.
On the other hand, the subcontractor works for the contractor to do construction.
A contractor needs to register in CIS except for the subcontractors. Sub-contractors don’t necessarily need to register, but there are more taxes collected in their paycheck.
There are major complications if there is no valid registration in CIS as a subcontractor that involves deduction salary at an increasing rate. If failed to comply, the tax return can lead to fines and annual tax bills.
And if there is no submission for three years for filling date, it will result in a large amount of money lost of refunds and even bankruptcy.
Scary enough? Well, there are solutions to prevent these risks:
- Prepare a full written summary for reference.
- Make sure as a contractor or subcontractor you have HMRC
- Take full legal responsibility for the contracted self-employed
- Evaluate and pay PAYE tax and status submissions to the Revenue.
Moreover, your business must have a positive status review to reduce the risk according to the Employment of Rights Claims and minimized the cost for direct employment.
Some companies offer security for CIS Payrolls. Provides services of construction workers and providing better solutions for its problems and disputes.
The company EEBS CIS Payroll Solution guarantees thousand of subcontractors with the compliance of CIS Payroll. They offer services such as protection for distracts, penalties, and management resources.
The company also extends its services in maintaining the contractors’ flexibility, cost-effective workforce, and compliance in legislative responsibilities.
With an affordable price for their services, they give full priority to CIS payroll security for your company.
So you do not have to worry about your money and focuses more on your job.
There are fixed policies that are needed to be taken care of because it could lead to some issues later. Contractors are responsible for subcontractors to manage resources to avoid complications regarding Construction Industry Scheme.
As stated above, you can either let companies like EEBS handle the task for them and well take care of legal basis in compliance with HMRC requirements.
Furthermore, constructors and subcontractors should be aware of these problems. Also, to protect them from their rights as an individual workers.