HMRC recently published a list of helpful reminders regarding the submission of monthly returns to HMRC. This article lists some of the points highlighted.
Each month contractors must send HMRC a complete return of all payments made to subcontractors within the scheme in the preceding tax month. This is regardless of whether the subcontractors were paid:
- net of the standard deduction of 20%
- net of the higher deduction of 30% or
- gross (you still need to include gross payment status subcontractors on your monthly submission if you pay them in the month even though no deductions have been made from their payments).
This monthly return must reach HMRC within 14 days of the end of the tax month it is for.
You can make your monthly returns using either:
- the free HMRC CIS online service or
- commercial CIS software
Contractors who know they won’t be paying any subcontractors for several months should let HMRC know. You can do this by selecting the ‘Inactivity Request’ box under the declarations section of the return. HMRC will make your CIS record ‘inactive’ for 6 months which means you will not need to send any monthly returns (including nil returns) during this period of inactivity. If, however the situation changes during that time and you start to pay subcontractors again, you must tell HMRC.
If you stop using subcontractors within the Construction Industry Scheme permanently or stop using subcontractors but continue to have employees liable to PAYE deductions, you need to tell HMRC and they will update your records to show you are no longer a contractor. Once all the required contractor monthly returns have been received up to the requested date of cessation then no further monthly returns (including nil returns) should be submitted. If, however you start making payments to subcontractors under the Construction Industry Scheme again you will need to advise HMRC.
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