Your monthly CIS return is due by the 19th of every month, and it covers the tax month that ran from the 6th of the previous month to the 5th of this one. Miss it by a single day and the penalty is £100.
That is the whole thing in two sentences. The rest of this page is the detail that stops it going wrong, written from the returns we file for construction companies every month.
The dates, and why people get them wrong
The CIS tax month does not line up with the calendar month. It runs from the 6th to the 5th. So the return you file by 19 October covers everything you paid subcontractors between 6 September and 5 October.
Two separate deadlines sit in the same week and they are easy to confuse:
- 19th of the month: the return itself has to be with HMRC.
- 22nd of the month: the deductions you took have to be paid over to HMRC, if you pay electronically. If you still pay by post it is the 19th.
Filing the return does not pay the money. They are two jobs.
What you need before you start
Get this together first and the return takes ten minutes instead of an evening.
- Every payment you made to a subcontractor in the tax month, with the date.
- The split between labour and materials on each one.
- Each subcontractor’s UTR and their verification result.
- Your Government Gateway login for the CIS online service.
Filing the return, step by step
1. Open the return for the right month
Log in to the CIS online service through your Government Gateway account and select the tax month you are filing for. Check the dates on screen before you enter anything. Filing against the wrong month creates two problems instead of one.
2. Enter each subcontractor
For every subcontractor you paid, you enter the gross amount, the cost of materials, and the deduction. The system works out what it expects the deduction to be from the rate on their verification.
If your figure and the system’s figure disagree, stop and find out why before you submit. That gap is usually a materials error.
3. Get the materials split right
This is the single most common mistake we correct.
The deduction comes off labour, not materials. If a subcontractor invoices you £5,000 and £2,000 of that is materials they bought and paid for themselves, the 20% comes off the £3,000 of labour. That is £600, not £1,000.
Two conditions on the materials figure. It has to be the actual cost the subcontractor paid, not a marked up price. And if the subcontractor is VAT registered, you use the cost excluding VAT.
Over deduct and you have taken money off a subcontractor that was never yours to take. Under deduct and HMRC comes to you for the difference.
4. The employment status declaration
Before you submit, the return asks you to declare that none of the people listed should actually be employees. It reads like a tick box and it is not.
If someone works only for you, on your hours, with your equipment, under your supervision, HMRC’s view is that they are employed. The declaration is what they point to when they come back for the PAYE and National Insurance.
5. Submit and keep the reference
You get a confirmation reference back. Save it. It is the only proof you filed, and it is what settles a penalty notice that should never have been issued.
Nil returns
If you paid no subcontractors in the tax month, you still have to file. A month with nothing in it is a nil return, not a month off.
The alternative is telling HMRC you are inactive, which covers you for up to six months. Worth doing if you know you have a quiet winter coming. What you cannot do is nothing, because the £100 lands the same either way.
What late filing costs
| How late | Penalty |
|---|---|
| 1 day | £100 |
| 2 months | A further £200 |
| 6 months | A further £300, or 5% of the deductions on the return if that is more |
| 12 months | A further £300, or 5% of the deductions if that is more |
These stack. A return you forgot about a year ago is £900 before anyone has looked at whether the figures were right.
There is a separate consequence that costs more than the penalties. Late CIS returns break the compliance test for gross payment status, so one forgotten month can cost you the ability to be paid in full for the next twelve.
Questions we get asked
What are CIS returns?
A monthly report to HMRC listing every subcontractor you paid for construction work in the tax month, what you paid them, and what you deducted. Every contractor in the scheme files one, every month, whether or not they paid anybody.
When is the CIS monthly return due?
By the 19th of the month, covering the tax month that ended on the 5th. The deductions are paid over separately by the 22nd if you pay electronically.
How do I file a monthly CIS return online?
Through the HMRC CIS online service using your Government Gateway login, or through commercial payroll software that submits for you. Select the tax month, enter each subcontractor with the gross amount and the materials cost, complete the employment status declaration, and submit.
Do I have to file a CIS return if I paid nobody?
Yes. File a nil return, or tell HMRC you are inactive for up to six months. Doing neither gets you a £100 penalty.
Is CIS deducted from materials?
No. The deduction applies to the labour element only. Materials the subcontractor bought and paid for come out of the calculation first, at actual cost, excluding VAT if the subcontractor is VAT registered.
What happens if I deduct the wrong amount?
If you deducted too little, HMRC looks to you for the shortfall. You have already paid the money to the subcontractor, so you pay it twice. If you deducted too much, you owe it back to the subcontractor.
If you would rather not do this every month
We file CIS returns for construction companies across the UK, alongside the payroll and the year end. The returns go in on time, the materials split is right, and the deductions are reconciled against what HMRC holds rather than assumed.
Have a look at how we handle CIS, or book a call and we will go through your last three months and tell you what we find.
Filing this every month against a large subcontract base is a job rather than a task. There is more on that here: accountants for contractors with a large subcontractor base.