Members of the Construction Industry Scheme (CIS) are due to get letters from HMRC where errors have been identified in their monthly returns. The letters, due in October, are in response to three common errors identified by HMRC.
Using the wrong CIS deduction rate
Contractors must complete checks to verify a subcontractor when required, with HMRC confirming the deduction rate to use.
Rates change and CIS members should always use the latest rate notified by HMRC, not an old rate or one used on a previous return.
Not recording the cost of materials
The costs of materials must be recorded separately when they are included on the invoice. CIS deductions usually apply to labour, not materials and recording figures separately helps the return match the client’s records.
Entering incorrect figures
Payment, material and deduction figures should be checked against payroll, invoice or accounting records before the return is submitted.
HMRC will continue checking CIS returns and may ask clients to review their records and explain how the return was completed. HMRC may contact taxpayers by letter or email and to check that the message is genuine, use the following link.
https://www.gov.uk/government/collections/check-a-list-of-genuine-hmrc-contacts
Should you need help with CIS deductions or communicating with HMRC, please contact us. We’re here to help.
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