| Guvnor

What this means for your business

18 obligations

1 penalties

24 guides

Enforced by: HMRC
Applies to: United Kingdom
On this page: 18 compliance obligations, 24 practical guides

Read full text on legislation.gov.uk

What you must do

18 compliance obligations under this legislation.

Appointments 1

If your company makes payments under construction contracts, you can choose another company in the same group to act as your scheme representative for CIS returns and payments. Once you decide on a representative, you must give written notice to the HMRC Commissioners before the appointment becomes effective.

Contractor s.5 HMRC When you appoint a scheme representative

Notifications 2

If HMRC sends you a default notice because a specified construction payment hasn’t been received on time, you can challenge that notice. You must notify an HMRC officer that you believe you’re not in default within 30 days of the notice, and provide evidence to support your claim. If the appeal succeeds, the notice is withdrawn.

Contractor s.47 HMRC When you receive a default notice for a CIS payment

If your limited company (a close company) issues new shares or sells shares and the new holder was not a shareholder before, you must tell HMRC about it within 30 days. This keeps the tax scheme updated on who controls your company. It only applies to companies that are part of the Construction Industry Scheme’s gross‑payment registration.

Director/Officer s.53 HMRC Issue or transfer of shares that gives a new person's control and …

Other requirements 1

If a contractor in the Construction Industry Scheme dies, the people handling their estate (personal representatives) have to step into the contractor’s shoes and carry out all the CIS duties the contractor would have been required to do – such as submitting returns, keeping records and making any necessary tax payments. In practice this means the estate must continue to meet all ongoing CIS compliance obligations.

Any Person s.54 HMRC When a contractor covered by the CIS Regulations dies

Payments and fees 4

If you pay a company subcontractor, you must deduct the required CIS amount from that payment and send it straight to HMRC. HMRC will then use the money to cover the subcontractor’s National Insurance, PAYE and other liabilities. If you have deducted more than necessary you will get a refund after the tax year ends, but only after the subcontractor has filed the required return and the tax year has closed.

Contractor s.56 HMRC When making a contract payment to a company subcontractor that is subject …

If HMRC issues you an electronic payment notice for Construction Industry Scheme tax, you must pay the amount using an approved electronic method such as BACS, iDeal or similar. This applies even if the tax is also due under other PAYE rules. If HMRC has given a specific direction you must follow it.

Contractor s.45 HMRC When an e‑payment notice is issued for the tax year under regulation …

If you’re a contractor in the construction industry, any tax that you have had deducted from your invoice payments must be paid straight to HMRC within a strict deadline – 14 days after the end of each tax period unless you use an approved electronic method, in which case you have 17 days. Keep a record of the payment and ask for a receipt if you need proof.

Contractor s.7 HMRC When you are a CIS contractor who has deducted tax from your …

If HMRC sends you a default notice and a surcharge notice for a payment you owe under the Construction Industry Scheme, you must pay the surcharge. The amount is based on how many defaults you’ve had in the period and must be paid within 30 days of the notice.

Contractor s.48 HMRC A default notice and a surcharge notice are issued for a specified …

Record keeping 5

If the contractor who pays you under the Construction Industry Scheme withholds sums that HMRC treats as payments toward your tax liability, you must keep detailed records of what you would have owed if the money hadn’t been withheld and the amounts that were deducted. HMRC can ask to see those records at a time and place agreed with them, and you must hand them over or let the HMRC person take copies. So, when your contractor does CIS withholding that is treated as liability payment, keep the required paperwork and be ready for an inspection at any reasonable request.

Contractor s.52 HMRC When your contractor withholds sums under the CIS that HMRC treats as …

If a subcontractor says they were unemployed in order to avoid CIS obligations, you must keep proof of that claim. When HMRC asks, you provide the supporting documents that show the subcontractor was genuinely registered as unemployed during the relevant period.

Contractor s.35 HMRC When a subcontractor claims unemployment to qualify for CIS exemption

If you are applying to register for the Construction Industry Scheme (CIS) in the UK, you must prove that your company is a genuine construction business. HMRC will require a specific set of records – your business address, invoices/contracts/purchase orders, payment details, books and accounts, and your business bank statements – to satisfy the ‘business test’. Having these ready ensures your registration can be processed without delays.

Contractor s.27 HMRC When applying for registration for gross payment under the CIS

Under the Construction Industry Scheme (CIS) you must keep detailed records of all payments and deductions made to sub‑contractors. If an HMRC official (or someone nominated by HMRC) asks, you must hand over those records for inspection and give them copies if requested, keeping them for at least three years after the relevant tax year ends.

Contractor s.51 HMRC Whenever an HMRC‑nominated person requests inspection of your records

If you say you were outside the UK during the period that keeps you out of the Construction Industry Scheme, you must give HMRC a document from the foreign tax or social‑security authority that shows you were there. This proves you’re not subject to the usual CIS rules while abroad.

Contractor s.33 HMRC Claiming you were abroad during part of the qualifying period

Registration and licensing 1

If you want to receive payments on your construction jobs through HMRC’s Construction Industry Scheme (CIS), you must register as a contractor or subcontractor. HMRC will ask you to prove who you are with a range of identity and business papers. You need to hand in documents such as your birth certificate, National Insurance number, unique taxpayer reference, utility bills, council tax, passport or driving licence, and if you’re a company, the registration number, memorandum and articles. HMRC may also want to see these in person. Providing false information can lead to a refusal or cancellation of your registration, so make sure everything you give is accurate.

Contractor s.25 HMRC When registering for gross payment or payment under deduction in the Construction …

Reporting and filing 4

If you are a sub‑contractor in the construction sector and you have paid more CIS deductions than the tax you owe for the year, you can get the excess back. You must submit an application to HMRC before the year ends, with a declaration and the required evidence. HMRC will review the documents and, if they agree, refund the excess credit.

Self-Employed s.17 HMRC If your CIS deductions in a tax year exceed your taxable liability …

If HMRC thinks you still owe money on a CIS deduction 17 or more days after the end of a tax period, they can send you a notice. You must then submit a return showing how much you owe under the scheme within 14 days of that notice.

Contractor s.10 HMRC 17 or more days after a tax period ends and HMRC issues …

If you've lived abroad at any point during the qualifying period of the Construction Industry Scheme, HMRC must be shown that you have met comparable tax obligations in that country. You need to get a formal notice or documented confirmation from the foreign tax authority and forward it to HMRC. Failure to provide this evidence could break the scheme’s compliance requirements.

Self-Employed s.34 HMRC living abroad during the qualifying period

If you or your staff (as a self‑employed contractor under CIS) want to be exempt from deduction because you were studying full‑time, HMRC requires a statement from your educational institution confirming the dates you were a full‑time student. Without that statement you’ll lose the exemption and may face tax penalties.

Self-Employed s.36 HMRC Claiming CIS exemption because of full‑time education

Penalties for non-compliance

1 penalty under this legislation.

Fine

Return unpaid CIS amount within 14 days of notice

Fine up to £300

s.10 Penalises: Return unpaid CIS amount within 14 days of …

Practical guidance

Our guides explain how to comply with the requirements above.

Sections and provisions

62 classified provisions from this legislation.

19 Duties 2 Powers 7 Definitions 12 Exemptions

Duties 19

s.5 Scheme representative remains liable in relation
s.7 Payment, due date for payment of amounts deducted and receipts
s.10 Return and certificate if amount may be unpaid
s.12 Certificate after inspection of records of contractors and sub-contractors
s.17 In-year repayments of provisional excess credit
s.25 Registration for gross payment or for payment under deduction and cancellation of registration for payment under deduction
s.27 Evidence prescribed to satisfy the business test
s.33 Absence abroad – evidence of living outside the United Kingdom
s.34 Absence abroad – evidence of compliance with tax obligations
s.35 Evidence of unemployment
s.36 Evidence of full-time education
s.45 Mandatory electronic payment
s.47 Default notice and appeal person who appears
s.48 Default surcharge specified payment
s.51 Inspection of records of contractors and sub-contractors
s.52 Inspection of records of sub-contractors – additional provisions
s.53 Information as to change of control of close company
s.54 Death of contractor
s.56 Application by the Commissioners for Her Majesty’s Revenue and Customs of sums deducted under section 61 s Revenue and Customs

Powers 2

s.3 Multiple contractors
s.50 Delegation of Commissioners for Her Majesty’s Revenue and Customs' functions

Definitions 7

s.2 Interpretation the Act employer reference ICTA
s.8 Quarterly tax periods SSCBA SSC Regulations Student Loan Regulations
s.29 Evidence prescribed to satisfy the turnover test relevant turnover threshold relevant payment
s.30 Number of partners or relevant persons
s.37 Interpretation qualifying period
s.38 Interpretation official computer system specified payment
s.39 Whether information has been delivered electronically

Exemptions 12

s.4 Monthly return
s.6 Verification etc of registration status of sub-contractor and nominee
s.9 Recovery from sub-contractor of amount not deducted by contractor
s.11 Notice and certificate if amount may be unpaid
s.13 Determination of amounts payable by contractor and appeal against determination
s.14 Interest on amounts overdue
s.18 Small payments
s.19 Work carried out on land owned by person to whom payment is made
s.20 Reverse premiums
s.32 Exceptions from compliance obligations
s.42 Information sent electronically on behalf of a person
s.49 Surcharge notice and appeal

🚧 UNDER CONSTRUCTION

What this means for your business

What you must do

Appointments 1

Appoint a scheme representative and notify HMRC

Notifications 2

Appeal a default notice from HMRC within 30 days

Notify HMRC of new share control within 30 days

Other requirements 1

Personal representatives must fulfil contractor’s CIS duties

Payments and fees 4

Deduct and remit CIS payments to HMRC correctly

Pay CIS tax via approved electronic method

Pay deducted tax to HMRC on time

Pay the default surcharge to HMRC within 30 days

Record keeping 5

Keep CIS records and let HMRC inspect them

Keep records proving subcontractor unemployment for CIS exemption

Provide evidence you are running a construction business

Provide records for HMRC inspection under CIS

Supply HMRC with proof you lived abroad during the qualifying period

Registration and licensing 1

Register for CIS payment by providing required ID and documents

Reporting and filing 4

Apply for an in‑year CIS repayment

Return unpaid CIS amount within 14 days of notice

Submit overseas tax compliance evidence to HMRC

Submit proof of full‑time education to HMRC

Penalties for non-compliance

Return unpaid CIS amount within 14 days of notice

Practical guidance

Sector-Specific 24

Aggregate Levy for construction businesses

CIS: verifying subcontractors with HMRC

Appealing a CIS penalty - what counts as a reasonable excuse

Warning signs of CIS fraud in your supply chain

Your GPS has been cancelled - what happens now

Apply for CIS gross payment status

How to correct errors on your CIS return

Your CIS monthly compliance cycle

CIS for small builders - what you actually need to know

Verify a subcontractor's CIS status

Using occasional labour on construction jobs - your CIS obligations

Managing cashflow when CIS deductions are taken

Common CIS mistakes and how to avoid them

Claim a refund for CIS deductions

Submit your CIS monthly return

Register as a CIS contractor

CIS nil returns - when you must file and when you don't

Am I a 'deemed contractor' under CIS?

Register as a CIS subcontractor

Keeping your CIS gross payment status

What to do if you've missed a CIS deadline

Construction tax compliance - how CIS, VAT, CITB, and PAYE work together

Calculate CIS deductions

Protecting your business from CIS supply chain fraud

Sections and provisions

Duties 19

Powers 2

Definitions 7

Exemptions 12

UNDER CONSTRUCTION