When a contractor makes a CIS deduction they must provide the subcontractor with a CIS payment and deduction statement. This is the written evidence which the subcontractor can use to prove any tax deductions with HMRC.
The CIS payment and deduction statement must be provided within 14 days of the end of the tax month in which the payment was made. As the tax months end 5th of each month the reporting deadline is therefore the 19th.
CIS payment and deduction statement layout
There is no default template for the CIS payment and deduction statement. Contractors can make up their own templates to send to subcontractors.
The CIS payment and deduction statement must however show the following information:
- The contractors name
- The contractors employer tax reference
- The month to which the payment relates, for example the month end 5th May 2018
- The subcontractors name
- The subcontractors unique tax reference
- The verification number provided by HMRC during the verification process – this is only compulsory for higher rate deductions at 30%
- The gross amount
- The CIS qualifying materials amount
- The CIS tax amount
Where subcontractors have gross payment status there is no obligation for a contractor to provide them with a CIS payment and deduction statement. However HMRC do consider it good practice to issue one.
2 or more payments in the same month
A contractor may pay a subcontractor more than once in the same month. As an example some subcontractors may wish to be paid weekly.
When this happens, the contractor can include all of the payments on a single CIS payment and deduction statement. This would therefore cover all the payments in the tax month.
Alternatively the contractor can issue several CIS payment and deduction statements one for each payment.
The choice is up to the contractor and it will typically depend on the software they are using. But, whichever option is chosen it is important to remember that the subcontractor must receive the CIS payment and deduction statements by the 19th.
CIS payment and deduction statement example
As mentioned above there is no default template for CIS payment and deduction statements.
However HMRC have included in their guidance an example of what the statement could look like. We often find that most software use something similar to this example set by HMRC, so we would recommend contractors use it as a starting point.
At Patterson Hall Chartered Accountants we are experts within all aspects of the Construction Industry Scheme. We have produced an ultimate guide to all things CIS with many user friendly helpsheets and examples. Take a look at our CIS Accountants guide.
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