The new Construction Industry Scheme (CIS) comes into effect in April 2007 and contractors and subcontractors are gearing up to for the changes in rules and procedures.

From April 2007, under new CIS, there will be no vouchers and no annual returns. Instead, contractors will report payments on monthly returns and will be required to give pay statements to those of their subcontractors paid under deduction. HMRC advises that contractors will need to make changes to how they use their software to deal with this.

In a letter to contractors, HMRC says:
"As a first step, you should check whether your current software provider is planning to upgrade its software to support new CIS. If it is, you’ll need to check with your provider to understand exactly what that will mean for you. If your provider has no plans for a new CIS upgrade, you’ll need to consider how you are going to complete and send monthly returns – and, in particular, whether you want to do that on paper or online.

"Paper:If you choose to make your returns on paper, we will send you a partially completed form containing details of the subcontractors shown on our records as having been paid recently by you. You will need to add payment information for them, plus details of any other subcontractors paid in the month. If you intend to send paper returns, you must use the return form supplied by HMRC: substitute forms are not acceptable.
This means that, using this option, you are likely to have to fill in the return manually. You will not be able to send your own version of the return.

"Online:If you would like to file online you have a number of options.

• If you have a small number of subcontractor payments to report each month (that is, fewer than 50) you could use HMRC’s free ‘Online Return and Forms – CIS’ product. You’ll need to think about how you transfer data to this from your in-house system.


• If you use commercial software you may be able to upgrade or replace your current software with a product that will support online filing for new CIS.


• If you have the development capability in-house you may consider updating your current software to support online filing over the internet or by Electronic Data Interchange (EDI).

"Go to www.hmrc.gov.uk/new-cis for more information about CIS Online services. If you have any questions phone the CIS Helpline on 0845 366 7899, open Monday to Sunday 08:00 – 20:00. If, having considered your options, you are unsure how you will make your monthly returns, please phone the CIS Helpline."

Further information
For more information about the CIS see:

• Sorting out self-employed v. employed status - Hardhatter


• The changes from the 'old' to the 'new' CIS - Hardhatter


• Introduction to the new CIS. - Hardhatter

Hardhatter also has a dedicated newsroom for all issues relating to the CIS. You can subscribe to receive an email alert to your inbox each time new information about the CIS is posted.

--

If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy.
-
Susie Hughes
The Editor © Hardhatter 2006