CIS ― penalties for late payment, returns or incorrect registration

Produced by a Tolley Employment Tax expert

Employment Tax

Guidance

The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of under-declarations or failures to notify chargeability by subcontractors, many of whom came to work in the UK for relatively short periods without paying any tax.

The scheme operates to withhold tax at source at the point of payment, thereby reducing the risk of a subsequent default by the subcontractor. Although, if the subcontractor can prove he has complied with his tax obligations he is able to receive payments gross.

The scheme has undergone regular changes since its inception and the current regime came into effect on 6 April 2007.

For a summary of the CIS, see the CIS ― overview guidance note. For an in-depth discussion on contractors and subcontractors, see the CIS ― contractors and CIS ― subcontractors guidance notes.

CIS returns and payment of tax

The contractor usually pays over the tax withheld to HMRC 14 days from the end of the tax month (ie the 19th day of each

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