CIS accountants for builders and trades in Liverpool

The Construction Industry Scheme (CIS) is how HMRC collects tax from people working in construction. When a contractor pays you, they take a deduction from the labour part of your invoice and pass it to HMRC. The deduction is not an extra tax. It is an advance payment towards your own income tax and National Insurance.

Deductions should come off labour only, not materials. If a contractor deducts from the whole invoice, you lose money until it is put right. We check your payment statements against your invoices so this is caught early.

The common mistakes we look out for are simple ones that cost real money:

• Deductions taken at 30% because your registration was not matched to the contractor’s records
• Payment statements that are missing, late or show the wrong figures
• Materials you bought counted as labour, so too much tax is deducted
• Expenses such as tools, van costs and fuel left off the tax return
• Returns filed late, which delays the refund and can add penalties

Keeping a copy of every invoice and every statement, month by month, is the easiest way to avoid most of these problems. A photo on your phone is fine. We can give you a simple way to send them to us as you go.

If you are a self-employed subcontractor, you get overpaid deductions back through your Self Assessment tax return. The refund comes after the return is filed, so filing early in the year means getting your money sooner. You do not have to wait for the 31 January deadline.

Say you invoiced £40,000 of labour and had £8,000 deducted at 20%. Your allowable expenses were £10,000, so your profit is £30,000. Income tax is 20% of (£30,000 minus the £12,570 Personal Allowance), which is £3,486. Class 4 National Insurance is 6% of the same £17,430, which is £1,045.80. Your total bill is £4,531.80. You have already paid £8,000, so about £3,468 comes back to you, assuming you have no other income.

1. 1

   Gather your statements

   We collect the monthly CIS statements from each contractor and chase any that are missing.

2. 2

   Add up your expenses

   Tools, van costs, fuel, materials you paid for, workwear, phone and insurance all reduce your profit.

3. 3

   File your return

   We prepare and file your Self Assessment return as soon as the tax year ends on 5 April.

4. 4

   Receive the refund

   HMRC repays the overpaid tax to your bank account once the return is processed.

If you trade through a limited company, the process is different. The company offsets the deductions against its own PAYE and CIS bill through the Employer Payment Summary, or claims a repayment from HMRC after the tax year. Our guide on how to claim a CIS tax refund covers both routes.

Yes, if you qualify for gross payment status. Contractors then pay you in full and you settle your tax through your return. HMRC looks at four things.

• Compliance: you have paid tax and filed returns on time in the past.
• Work: you do construction work in the UK.
• Bank account: you run the business through a bank account.
• Turnover: over the last 12 months, excluding VAT and materials, at least £30,000 as a sole trader. Partnerships need £30,000 per partner or £100,000 in total, and companies £30,000 per director or £100,000 in total.

As soon as you pay other trades for construction work, you are a contractor under CIS. You must check each subcontractor with HMRC, take the right deduction and file a CIS return by the 19th of every month. You also give each subcontractor a statement of what you deducted.

We run this for you as part of our payroll, PAYE and CIS service. We verify new subcontractors, file the monthly return and send out the statements, so the deadline never sneaks up on you mid-job. If you are VAT registered, we also make sure the VAT domestic reverse charge is applied correctly to the building work you invoice and receive.

Our fees are fixed and monthly. Sole traders start from £99 a month and limited companies from £150 a month. That covers your tax return or accounts, CIS checks and advice when you need it. You get the exact price in writing within one working day after a free 20-minute chat, and it stays the same for 12 months unless your business changes. Full details are on our fees page.

Already with another accountant? We can switch you over at any time of year. We write to your old accountant, collect your records and deal with HMRC. You sign one form.