Following on from our previous guide about CIS registration, let’s tackle another crucial topic: completing your monthly CIS returns. As a construction accountant, I’ve helped countless contractors submit their CIS returns, and I’ll share the exact process to help you avoid common pitfalls.
When Must You Submit CIS Returns?
Monthly CIS returns must be submitted to HMRC by the 19th of each month, covering all payments made to subcontractors in the previous tax month. For example, your return for payments made in April must be submitted by 19th May.
Step-by-Step Guide to Completing Your CIS Return
1. Gather Your Information
Before starting, collect:
- Payment records for all subcontractors
- Verification numbers for each subcontractor
- Details of any materials costs claimed
- Information about any contracts that ended during the month
2. Access the CIS Online Service
- Log into your HMRC Government Gateway account
- Select ‘Construction Industry Scheme’
- Choose ‘File a Return’
3. Enter Subcontractor Details
For each subcontractor, you’ll need to provide:
- Their UTR (Unique Taxpayer Reference)
- Total payment amount before deductions
- Cost of materials (if applicable)
- CIS deduction amount
- If no payments were made, confirm this on the return
4. Calculate Deductions Correctly
Standard deduction rates are:
- 20% for registered subcontractors
- 30% for unregistered subcontractors
- 0% for those with gross payment status
Common Mistakes to Avoid
- Missing the Deadline
- Set up calendar reminders for the 19th of each month
- Consider submitting returns weekly if you make frequent payments
- Incorrect Payment Calculations
- Don’t deduct VAT before calculating CIS deductions
- Only allow verified material costs
- Include all payments made in the tax month
- Forgetting ‘Nil Returns’
- You must submit a return even if you made no payments
- Mark it as a ‘Nil Return’ to avoid penalties
Handling Special Situations
Late Submissions
If you miss the deadline:
- Submit the return immediately
- Expect an automatic penalty
- Consider appealing if you have a reasonable excuse
Corrections
To correct errors:
- Submit an amended return online
- Contact HMRC if you spot errors after the deadline
- Keep records of all corrections
Material Costs
Only allow deductions for:
- Materials used in construction
- Items delivered to site
- Costs that can be verified
Best Practices for CIS Returns
Record Keeping
- Maintain digital records of all payments
- Save verification numbers
- Keep copies of invoices and receipts
- Document material cost calculations
Use Software Solutions
- Consider CIS-specific accounting software
- Set up automatic payment calculations
- Use digital record-keeping systems
Regular Reconciliation
- Check subcontractor statements monthly
- Reconcile CIS deductions with payments
- Verify material costs before submission
Need More Help?
In our next post, we’ll cover “Understanding CIS Deduction Rates“
Stay compliant and profitable,
