Summary of Threat
Time consuming and rigid reporting requirements
Significant fines for errors or omissions
Huge negative impact on cash flow from the loss of Gross Payment Status
Get the right advice & ensure you are protected
Speak To Colette
Specialist Construction Payroll Advisor
THREAT IN DETAIL
Whilst HMRC’s CIS scheme has seen a number of revisions over the years, with the latest being in April 2016, It remains a time consuming and complicated process for all contractors large or small.
The Burden of CIS Administration
Your responsibilities are to:
- Verify each sub-contractor with HMRC
- Calculate and pay CIS tax
- Inform the sub-contractor the amount that they will be paid
- Take full responsibility for all status submissions to the Revenue
- Provide both a payment statement (for each time the sub-contractor is paid) and an annual CIS deduction statement.
The Risk of CIS Penalties
The current penalties for failure include:
- Failure To submit monthly return, (including a nil return) by the correct date, £100
- Monthly return is still outstanding after 2 months, an additional £200
- Monthly return outstanding after 3 months = additional £300 or 5% of the CIS deductions from the return (whichever is higher), and additional increases for returns that remain outstanding at 6 and 12 months.
- Review and even loss of gross payment status
Additionally, HMRC can levy up to £3000 per monthly return submitted if you incorrectly tick the self-employed status declaration when your sub-contractors should have been employed.
The loss of gross payment status can have a crippling effect on a company’s cashflow and result in:
- Up to 20% of a companies earnings being held by HMRC.
- Deductions are held until the following financial year
- A significant drop in your credit rating
- A loss of companies credibility and ability to trade
What is the solution?
By appointing EEBS we remove the vast majority of your CIS compliance responsibilities.
All you have to do is simply verify us once, and complete a monthly CIS return detailing EEBS as the sub-contractor, saving you time and a lot of aggravation.