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CIS 344 - Getting paid by a contractor – advice for subcontractors


									                                                                   Getting paid by a contractor
                                                                    – advice for subcontractors

                                   What does the contractor have to do first?
                                   When you first work for a new contractor, they must be satisfied that the contract
                                   between you is one of self-employment.

                                   The contractor may then have to contact us to 'verify' you. This enables the
                                   contractor to

                                   • check that you are registered for new CIS, and

                                   • find out whether they must pay you gross or under deduction, that is, with an
                                     amount taken off your payments on account of your tax and Class 4 National
                                     Insurance contributions (NICs) bill.

                                   There are times when the contractor does not need to verify you, such as where
                                   you have already worked for the contractor in the current or previous two tax years,
                                   or where you have already been verified by another company within the
                                   contractor's group.

                                   What information must I give the contractor?
                                   So that a contractor can verify you, you should give them the following information,
                                   depending on the type of your business. Your name should be the same one that you
                                   registered for new CIS, or for the old Scheme where you registered before 6 April 2007.

                                   Sole trader
                                   • name

                                   • unique taxpayer reference (UTR); you will find this on any letters from us

                                   • National Insurance number (NINO), if known.

                                   • partner's and firm's name

                                   • firm's unique taxpayer reference (UTR)

Welsh language                     • partner's unique taxpayer reference (UTR) or National Insurance number –
                                     if the partner is an individual within the partnership
Yr Iaith Gymraeg/Welsh language.
Ffoniwch 0845 302 1489 i dderbyn   • company's unique taxpayer reference (UTR) or company registration number –
fersiynau Cymraeg o ffurflenni a     if the partner is a company within the partnership.
Large print                        • company's name
This factsheet is                  • unique taxpayer reference (UTR)
available in large
                                   • company registration number.
print. If you would
like a copy, please                What happens next?
contact your HM                    We will tell the contractor to pay you gross, if that is what we have previously agreed
Revenue & Customs                  with you. Otherwise, the contractor will be told to make a deduction from your
office.                            payment at the standard rate, after allowing for the cost of any materials you
                                   have incurred.

                                   If we cannot trace your record, perhaps because you have not registered for new CIS or
Factsheet                          have given the wrong details to the contractor, the contractor will be told to make a
for new CIS                        deduction at the higher rate from your payments. If this happens, you should contact
                                   the CIS Helpline on the number shown in the section on ‘Getting advice’ on page 2.
– use from 6 April 2007                                                                                     Please turn over

CIS344                                                    Page 1                                                  HMRC 11/05
                                       Written statement of deduction for subcontractors paid
                                       under deduction
                                       The contractor must give you a statement showing what you have been paid and how
                                       much has been deducted from you. This is in place of the CIS25 voucher that
                                       contractors issued to subcontractors under the old Scheme.

                                       The statement must be in writing or can be faxed to you. It may also be given to you in
                                       an electronic form but only when you agree to this.

                                       The contractor must give you a statement for each tax month or may choose to give
                                       you one for each payment if this is more frequent. A tax month runs from the 6th of
                                       one month to the 5th of the next month.

                                       Make sure the contractor gives you this statement as you may need it to help you fill in
                                       your Self Assessment Tax Return at the end of the tax year.

                                       If you have had deductions at the higher rate made from your payments, make sure the
                                       contractor has shown a 'verification' reference number on the statement because you
                                       will need that to claim a refund.

                                       Contractors do not have to give statements of deduction to subcontractors who are
                                       paid gross.

                                       What happens to the deductions?
                                       Contractors must pay any deductions over to us where they are held on account of your
                                       tax and Class 4 National Insurance contributions bill for the year.

                                       We will repay you where the deductions are more than you owe us, or ask you to pay
                                       more, where the deductions are not enough to meet your bill. This is because the
 Getting advice
                                       deductions that contractors make from your payments may not always cover your full
 You can get more detailed advice
                                       tax and Class 4 National Insurance bill when you send us your Self Assessment
                                       Tax Return.
 • our booklet CIS340, Guide to
   the Construction Industry
   Scheme, and                         In-year repayment of the deductions
 • our other CIS factsheets.           If your accounting period ends early in the tax year, for example, at 30 November or
 The booklet, factsheets and           31 December, you may apply for an in-year repayment where you think that deductions
 other information about new CIS       already taken from your payments exceed your tax and Class 4 National Insurance
 are available                         contributions bill for the tax year.
 • online at and
                                       If you are a sole trader or partnership and want to apply for an in-year repayment,
                                       please contact the CIS Helpline for guidance and an application form. You need
 • from the CIS Helpline on
                                       form CIS40 if you are a sole trader or form CIS41 if you are a partner in a firm.
   0845 366 7899.
 Our minicom number is                 In-year repayments are not available for companies though separate arrangements exist
 0845 366 7894.                        to allow companies to set any deductions against what they owe us for PAYE, NICs and
                                       CIS deductions. Please see our booklet CIS340, Guide to the Construction Industry
 For advice on Self Assessment,        Scheme for more information about this.
 call our Self Assessment Helpline
 on 0845 9000 444.

 To register as a contractor, please
 call our New Employer Helpline
 on 0845 60 70 143.

 Our Business Support Teams
 provide help about new CIS over
 the phone, and give presentations
 locally. To find out more, visit

These notes are for guidance only
and reflect the position at the time
of writing. They do not affect any
right of appeal.                                             Page 2

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