The Construction Industry and C.I.S.


Do you pay tax at source through the Construction Industry Scheme?

Having an accountant to review your affairs and assist with your self assessment tax return can be beneficial in terms of maximising what is typically a refund of tax.

An employed person automatically gets credit for their tax free personal allowance through their PAYE coding notice.  Which means they only pay tax on the taxable element.

What is different for you under CIS compared to PAYE?

You suffer a fixed rate of tax on all of your earnings.  Regardless of your entitlement to claim expenses and your tax free personal allowance.  This itself is no secret and is the main reason why traders such as yourself will file a self assessment tax return.

Usually leading to a tax rebate, once the above factors have been included.

But, how can you be sure that you are claiming as much as you can and also that your claims are relevant and reasonable?

This is where having an accountant to look after your affairs is essential.  Typically a fee can be agreed in advance and your accounts and tax return turned around pretty quickly leaving you access to your refund as soon as HMRC have processed and agreed the claim.

Why shouldn’t I engage the cheapest service I can find?

Ask around.  You will probably know people that use that service provider.  Typically they will complain about the length of time it takes to get their records processed.

Generally you will join a big queue of fee bargain hunters and be processed in turn by the least expensive and experienced processor that the provider can employ.

How else can they make money on your fee?

Ask yourself: Are you the cheapest tradesman in your field?  Why not?

The same is true here.  Sometimes it’s better to pay a bit more for a more skilled service and a faster turn around and generally those skills should realise a favorable return on the refund and offer a much more defensible position if HMRC should choose to challenge your affairs.

Why should I worry about having a defensible position?

HMRC don’t always check as thoroughly as you might think.  As their systems collate data and review industry statistics through various algorithms they may in a few years time decide that something does not seem quite right with traders in your line of work and start a systematic review.

At which point they collate even more information and by the time they come to your affairs they know an awful lot about what they can expect to find.

Now.  It’s fine to be outside their expected parameters, but in two/three years time will you remember this year’s activities and the trials and tribulations you experienced?

Probably not.  But your accountant should do, assuming you paid for sufficient level of service for them to care about your affairs enough to make the appropriate inquiries at the time of compiling your accounts and tax return.  Chances are the notes will be sat on their file.

Having a caring accountant in your team suddenly becomes extremely valuable.

What should I do now?

Please contact us and be welcomed to the team.