A CIS monthly return contains the details of each subcontractor paid. We will show you how to complete and submit the monthly returns.
Contractors need to be aware of their obligations under the construction industry. They must ensure that the correct deductions are made from the subcontractor and then reported to HMRC.
We will cover the HMRC filing requirements. This includes when the returns need to be filed, what information is included, plus an example of the CIS monthly return. We will also cover what to do if there are no subcontractors paid and how to amend a return.
Contractors must file the monthly returns within 14 days of the tax month end. All tax month ends are the 5th of each month, so the monthly return must be filed by the 19th of the month.
For example the monthly return ending 5th September 2023 covers all payments made to subcontractors between 6th August 2023 and the 5th September 2023. This CIS return must be filed by 19th September 2023.
The contractor must identify all payments to subcontractors in that tax month. The monthly CIS returns must therefore include all subcontractors paid. It does not matter what CIS tax rate was applied. As a result all subcontractors must be included, this includes gross 0%, net 20% or higher 30%.
Tip: Don’t forget to include subcontractors with 0% tax deducted. Contractors should identify all subcontractors paid in that tax month, even those with no tax deducted.
The contractor must submit the following information to HMRC:
– Subcontractors name
– Verification number
– Gross amount
– Materials amount
– Tax deducted
For more information on the above requirements see the blogs CIS subcontractor verification and CIS calculation example.
To file the CIS monthly return the contractor can either use the HMRC website or commercial software. Obviously contractors would use the same program as what was used when completing the CIS subcontractor verification process.
Below is a CIS monthly return example created using the HMRC website.
Contractors may have tax months in which there have been no payments to any of its subcontractors. When this happens they must file a nil return with HMRC.
If the contractor does not file the monthly return HMRC will then assume that the CIS return is late.
HMRC will issue a CIS penalty of £100. This penalty will be cancelled if a Nil return is then filed, however it is always best just to file all CIS monthly returns, even Nil returns on time.
Both the HMRC website and commercial software allow you to file amended CIS returns. You just make the change and resubmit.
HMRC have stated that they will not look to issue penalties for filing amended monthly returns. They also won’t take away the subcontractors CIS gross payment status, should they have it.
However if HMRC believe that the CIS monthly return was intentionally filed incorrectly they may look to take things further.
Conclusion
Filing CIS returns each month can feel like an unnecessary administrative burden placed on contractors. If you are a newly registered contractor or if you are an existing contractor who needs assistance with this burden then why not contact us. Often choosing the correct software can make all the difference. We recommend Quickbooks to all of our contractor and subcontractor clients.
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