If you are self-employed and paid through the CIS and your contractor deducts 20% of your wages they must, by law, give you a monthly CIS deduction statement that details how much you have been paid, and how much you have been deducted. No ifs, no buts, no maybes.

Why is this important to you? Well if you don’t have that statement and if the contractor hasn’t submitted his own reports (and simply pocketed your tax) you can’t prove that you have actually had your tax money deducted by the contractor. And to make matters worse, HMRC are likely to say that the “Net” amount that you have been paid is actually the gross amount of earnings – and because you can’t prove otherwise, they will tax you again on your net earnings!

Checks that you can undertake for your own peace of mind…

  • When you start with a contractor, they should ask you for your UTR and NI numbers as sole trader or UTR and Company Registration number for a company. If they don’t it is extremely unlikely they will try to verify you.
  • The contractor must supply you with monthly CIS statements. The statement must state the gross amount paid plus the CIS tax deducted – and in theory paid to HMRC. The contractor must make these payments to HMRC monthly.
  • In line with HMRCs guidance it is good practice to back up the amount you have been paid and deducted by keeping your own records. For example, invoices showing the CIS deduction. If you do not have invoices, at least have timesheets with the day rate and deductions totalled.
  • If you are still in doubt you can call HMRC on 0300 200 3210 (CIS department) and they can advise you.

If you need advice or help with your tax return contact the EEBS team taxreturn@eebs.co.uk or call 01245 493823 or click Tax Return Service