Instructions for Completing a CIS Tax Return
For anyone, from sole traders to business owners, completing tax returns can be a daunting and complex process.
Low Accountant in London provides advice and assistance to make the process of tax planning and tax returns as simple and stress-free as possible. Certain industries, such as the construction industry, require specific types of tax returns to be completed.
If you are self-employed or a contractor and are registered with the Construction Industry Scheme (CIS), you are responsible for paying the correct tax and National Insurance, and you will almost certainly be required to submit a CIS self-assessment tax return.
What exactly does the Construction Industry Scheme (CIS) entail?
The purpose of the CIS is to prevent fraudulent employment and tax evasion in the construction industry. Contractors use the scheme to deduct money from subcontractor payments and pay it directly to HM Revenue and Customs. These are considered tax advances on behalf of the subcontractor. All construction contractors are required to register for the scheme, which has been in place since 1971. Subcontractors are not legally required to sign up, but if they are not, the deductions from their payments increase.
What exactly is a self-assessment tax return for the Commonwealth of Independent States (CIS)?
If you are a member of the CIS, you must file a self-assessment tax return that discloses your earnings for the fiscal year. HMRC will determine whether the advance tax contributions were overpaid or underpaid once they have been assessed. Typically, HMRC will contact you to remind you that a CIS self-assessment tax return is due.
Will I receive a tax refund if I file a CIS self-assessment tax return?
Because deductions from payments under the CIS are made at a regular rate of 20%, subcontractors frequently overpay tax under the programme. As a result, you are likely to be eligible to claim back tax as part of the self-assessment procedure, but this is not guaranteed.
When must I file my CIS self-assessment tax return?
The current fiscal year will finish on April 5, 2020. You will then have until the end of October to file a paper self-assessment tax return, and until the end of January 2021 to file an online self-assessment tax return.
What should I do before filing a self-assessment tax return?
Before you begin, you must register with HMRC's online portal and fill out a SA100 form, as well as gather all of the necessary information.
What information must I include in my CIS self-assessment tax return?
Before you can finish your tax return, you'll need to gather a few crucial pieces of information.
These are some examples:
- Your Individual Tax Identification Number (UTR). This is a ten-digit number that was assigned to you when you registered for the CIS and is used by HMRC to determine how much you must pay.
- Complete information about your earnings for the previous year. This must contain your entire sales as well as any other income, such as rental income.
- Information on any damages incurred. It is possible to claim tax relief on these, but the amount is limited to £50,000 or 25% of your total adjusted income, whichever is greater.
- Interest earned, including any interest profits from bank accounts
- Contractor payment deductions (if you are a subcontractor). These must be totaled for the year, and specifics can be found on the contractor statements.
Can I recoup costs on my CIS self-assessment tax return?
You should also provide information about any business expenses you have incurred. If you are a subcontractor, you can claim certain expenses as long as they were incurred solely for business purposes. These costs include work tools and materials, protective clothing, equipment repairs and maintenance, and vehicle operating costs.
What happens if I don't file my CIS self-assessment tax return by the deadline?
If you fail to file your tax return on time, you will be fined by HMRC. This can be up to £100 if it is submitted up to three months late, but it can rise dramatically after that.
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