CIS registration

Contractors must register before paying their first subcontractor for construction work. Subcontractors are not legally required to register but face 30% deductions instead of 20% if they do not. Businesses outside construction whose average annual construction spend exceeds £3 million over three years become deemed contractors and must register.

Subcontractor registration is £49, contractor registration £69, both roles together £99, and a gross payment status application £119. HMRC charges nothing. Where you also need a UTR, our UTR and CIS package at £69 covers both. Fees are fixed and agreed before we start.

A Unique Taxpayer Reference, which comes from Self Assessment registration for a sole trader or Corporation Tax registration for a company, your National Insurance number, business details and bank account. Without the UTR, CIS registration cannot proceed, so we sequence them.

You register as an employer with HMRC, or add CIS to an existing PAYE scheme, and receive the references to file monthly CIS300 returns and pay deductions over. From your first payment to a subcontractor you must verify them, deduct at the rate HMRC specifies, give them a statement and file by the 19th of the following month.

Before paying a new subcontractor, the contractor checks them with HMRC online, giving their UTR and other details. HMRC confirms whether to deduct 20%, 30% or nothing (gross). The verification reference is recorded and statements show it. Subcontractors you have paid in the current or previous two tax years need not be re-verified.

Preparing sites, building, alteration, repair, extension, demolition, and installing heating, lighting, power, water and ventilation systems, plus internal cleaning of buildings during construction and painting and decorating. Architecture, surveying, scaffolding hire without labour, carpet fitting and delivery of materials are outside the scheme.

Approval from HMRC for a subcontractor to be paid in full with no deductions, settling tax through Self Assessment or Corporation Tax instead. It transforms cash flow for established businesses. To qualify you must pass a turnover test, a compliance test covering the last 12 months' filings and payments, and a business test. HMRC reviews status annually.

Net construction turnover, excluding VAT and materials, of at least £30,000 in the previous 12 months for a sole trader, £30,000 per partner for a partnership, and £30,000 per director for a company, or an alternative test of £100,000 for companies and partnerships. Evidence from invoices and deduction statements is needed.

The contractor becomes liable for the deductions that should have been made, plus penalties for failing to file monthly returns, which start at £100 per return and escalate. HMRC can also recover the tax from the contractor even though the subcontractor may have paid it. Registering before the first payment avoids all of this.

Since March 2021 the domestic reverse charge applies to most supplies between VAT-registered businesses within CIS: the subcontractor does not charge VAT and the contractor accounts for it. Invoices must state this. Registration under CIS is the trigger for the reverse charge, so new registrants need their invoicing changed at the same time.

Yes. The company registers with its Corporation Tax UTR. Deductions suffered by a company are offset against its own PAYE and CIS liabilities monthly through the Employer Payment Summary rather than reclaimed through Self Assessment, so the company needs a PAYE scheme even if the director is the only employee.

Subcontractors keep every deduction statement and reclaim the deductions through their year-end return; our CIS tax return service at £149 handles this. Contractors file the CIS300 by the 19th each month and issue statements; our monthly CIS service at £30 a month runs the cycle. Gross status holders must keep their compliance record clean for the annual review.