CIS Returns Guide To HMRC Compliance for UK Builders And Subcontractors
In the UK construction industry, staying compliant with HMRC regulations is essential to avoid penalties, manage cash flow, and build a trustworthy reputation. One of the key compliance requirements for contractors and subcontractors is filing CIS (Construction Industry Scheme) returns. Despite its importance, many businesses still struggle to keep up with CIS rules, paperwork, and deadlines, along with managing Construction VAT returns for companies, which adds another layer of complexity to staying fully compliant.
In this blog, we break down the CIS return process, explain why it matters, and outline how Accounting & Tax Associates can help UK builders, contractors, and subcontractors stay compliant and stress-free.
What is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is an HMRC initiative that regulates how payments to subcontractors for construction work are handled. Under the scheme:
- Contractors must deduct money from subcontractors’ payments and pass it to HMRC.
- These deductions count as advance payments towards the subcontractor’s tax and National Insurance (NI).
The scheme applies to most construction work in the UK, including building, repairs, decorating, and demolition.
Who Needs to Register for CIS?
Contractors and subcontractors working in the construction industry must register with HMRC for CIS.
- Contractors are businesses or individuals who pay subcontractors for construction work.
- Subcontractors are individuals or businesses doing construction work for a contractor.
Registration is mandatory for contractors, and while optional for subcontractors, registering means fewer deductions from your payments (20% instead of 30%).
What Are CIS Returns?
CIS returns are monthly submissions that contractors must send to HMRC detailing the payments made to subcontractors and any deductions taken. The return includes:
- Names and details of all subcontractors paid in the month
- Payment amounts made to each subcontractor
- Dedication amounts (20% or 30%)
- Verification status of subcontractors
These returns must be submitted by the 19th of each month, following the tax month (which runs from the 6th to the 5th).
Common Challenges Contractors Face with CIS Returns
Despite its straightforward concept, CIS compliance can be tricky for busy construction professionals. Some common issues include:
- Late or incorrect submissions resulting in HMRC penalties
- Errors in subcontractor verification or deductions
- Missing paperwork, like subcontractor statements or payment logs
- Manual recordkeeping increases the chance of errors
Even a minor mistake can lead to significant fines, cash flow disruption, and compliance risks.
Why CIS Compliance Matters for Your Construction Business
Maintaining CIS compliance offers numerous benefits beyond simply avoiding penalties:
- Builds trust with subcontractors through transparent payment processing
- Keeps your business HMRC-compliant, reducing audit risks
- Supports smoother tax planning and financial management
- Helps secure public and private contracts that require a strict compliance history
As a construction business grows, accurate and timely CIS returns become even more critical to operations and scalability.
How Accounting & Tax Associates Can Help
At Accounting & Tax Associates, we understand that your priority is running your site, not drowning in paperwork. That’s why we offer comprehensive, end-to-end CIS services for UK builders, contractors, and subcontractors, including support with Construction VAT returns for companies, helping you stay fully compliant with HMRC regulations.
CIS Returns and Subcontractor Statements
We prepare and file your monthly CIS returns accurately and on time, ensuring all subcontractors are verified and deductions calculated correctly.
Subcontractor Verification
We handle the verification process with HMRC, ensuring you’re applying the correct deduction rate (20% or 30%).
Subcontractor Payment Statements
We generate and send subcontractor statements every month, keeping your records compliant and your subcontractors informed.
Automated Bookkeeping with Xero, QuickBooks, and Sage
We use leading cloud accounting software to record transactions, track CIS payments, and reduce manual errors — all while giving you real-time insights into your finances.
HMRC Correspondence and Support
Received a CIS penalty notice? Need help responding to an HMRC enquiry? We provide expert support to handle correspondence and resolve issues efficiently.
Benefits of Outsourcing CIS Returns
Partnering with an expert CIS accounting service like ours offers more than just peace of mind:
- Save time by leaving monthly paperwork to experts
- Reduce costs associated with in-house admin and penalties
- Minimise risks with accurate reporting and software-backed workflows
- Improve cash flow visibility and control
- Get ongoing support both remotely and in person
Tips to Stay Compliant with CIS
- Verify all subcontractors before their first payment
- Maintain accurate records of payments and deductions
- Use CIS-compliant accounting software
- Set calendar reminders for each month’s 19th submission deadline
- Consult a CIS specialist to review your process and identify risks
Conclusion: Build with Confidence – Let Us Handle Your CIS Returns
Navigating CIS returns doesn’t have to be a burden. With the right support, you can ensure full HMRC compliance, streamline financial processes, and focus on growing your construction business. At Accounting & Tax Associates, we take care of everything — from subcontractor verification to cloud-based bookkeeping — so you can get back to building the future.
