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13th Apr 2024
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The changes from the 'old' to the 'new' CIS

by The Editor at 10:02 09/11/06 (CIS News)
After a 12 month delay, the new Construction Industry Scheme (CIS) comes into force on April 6, 2007, when the current scheme for paying subcontractors will be replaced by a new set of rules and procedures.
This will bring significant changes for contrators who use subcontractors, in terms of how they verify their status and how they are paid - and there are financial penalties for getting it wrong.

The main changes are:

  • There will no longer be any need for CIS cards, certificates or vouchers.

  • Contractors must check or 'verify' new subcontractors with HM Revenue & Customs.

  • Subcontractors will still be paid either net or gross, depending on their own circumstances, but it will be HM Revenue & Customs (HMRC) who tell the contractor which treatment to use during verification, not a piece of plastic.

  • There will also be a higher rate tax deduction if a subcontractor cannot be 'matched' on HMRC's system. This rate will apply until the subcontractor contacts HMRC and registers or sorts out any matching problem.

  • There will no longer be CIS annual returns.

  • Contractors must make a return every month to HM Revenue and Customs, showing payments made to all subcontractors. This will be sent to them in good time, and pre-populated from existing records. Contractors must declare on their return that none of the workers listed on the return are employees. This is called a Status declaration.

  • Nil returns must be made when there are no payments in any month. These can be made over the telephone as well as via the internet or on paper, but they must be made - there will be financial penalties for failure to submit a return.

  • The vast majority of subcontractors registered under the existing CIS rules will be transferred over to the new system and will not have to re-register.

  • New subcontractors, and those that formerly held only temporary registration cards that expired before new CIS starts, will be required to register with HM Revenue and Customs.

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Susie Hughes
The Editor Hardhatter 2006

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