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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: CIS: overview

Outline of the system

From 2007-08 onwards annual returns of payments to subcontractors will no longer be required.

Instead, every contractor who makes payments to subcontractors in respect of construction operations must send to HMRC every month:

  • a return CIS(300) with details of what has been paid to subcontractors in the month
  • any deductions made from those payments.

The outstanding returns will move into IDMS on or around the 29th of the month.

Once the outstanding returns are received in IDMS they are visible on the IDMS TIS screen.

Online filing of returns

Starting with the contractor return for the month ended 5 May 2016, due on or before 19 May 2016, all contractor returns must be filed online.  Paper returns will no longer be accepted. There will be limited exceptions; these are:

  • contractors who file using Welsh language returns, who will still be able to file by paper and the respective business teams will administer output and processing responsibilities
  • customers claiming they are unable to use the online service for religious or other reasons, who will be told to write to “HMRC, BX9 1BX” and their situation will be reviewed by the PT Operations Digital Assisted Team.

Nil returns

There is no legal obligation for a contractor to file a nil return if they have made no payments to subcontractors but they must tell HMRC that no return is due. Failure to inform us will result in specified charges and penalties being raised.

Paper returns

Contractors who file using Welsh language returns will still be able to file by paper and the respective business teams will administer output and processing responsibilities.

For all other contractors, from 30 April 2016 it is no longer possible to submit a paper return as the scanning process has been decommissioned. Any paper returns received after this date will be passed to the PT Operations CIS Processing Team at NIC&EO who will tell the contractors to submit their returns online.

Return period

The return period covers an income tax month - that is, from the 6th of one month to the 5th of the next.

Penalties

Penalties may be charged if the return is not made by the due date of 19th of the month. If a nil return is received late, any penalty issued will be cancelled.

Period of inactivity

Contractors who know they will not be paying subcontractors for several months should advise the CIS Helpline 0300 200 3210 who will suspend the issue of monthly returns and automatic penalties for up to six months.

If the situation changes and the contractor starts to engage subcontractors they must let us know so that we can start up the filing expectation again.

How the return can be submitted

Contractors can make their monthly returns:

  • via the internet at www.hmrc.gov.uk/new-cis
  • electronically, using either Electronic Data Interchange (EDI) or other third party software.

Nil Returns

Nil returns can be made:

  • using the electronic methods mentioned above
  • by the contractor calling the CIS Helpline (0300 200 3210).

CIS system

The CIS system holds contractor and subcontractor information and is capable of supporting the use of ‘e’ services, including communication over the internet, clarifying status, and verifying and submitting returns. It:

  • created a 2012-13 CIS charge for XP schemes and PSC schemes that did not join RTI during 2012-13
  • rejected the CIS figures for any PSC schemes that joined RTI during 2012-13.

Where BROCS rejects the CIS return details because the PSC scheme migrated from BROCS to ETMP during 2012-13, a CIS return charge was manually created on ETMP. These charges were raised by a centralised DM team.

BROCS and ETMP compare the annual charge and payments received and where an underpayment arises create an underpayment charge and send the charge details to IDMS for recovery action.

Accounting for charges and payments from 2013-14 onwards

From April 2013, all CIS payments for 2013-14 onwards are posted on ETMP. In addition, CISR sends the CIS charge and CIS signal details to ETMP each month.

CISR sends the CIS return details to ETMP via the interface on a daily basis following processing of the CIS returns. Details of any amendment CIS returns received by CISR are also sent to ETMP on a daily basis. Any CIS returns filed in advance of the current month will be sent from CISR to ETMP as the return period starts.

This means that HMRC now reconciles the CIS liability to the payments received on a monthly basis. This brings contractors in to line with RTI employers and allows DM to pursue both employers and contractors for any outstanding amounts far quicker than was previously the case.

Scheme types

PAYE and Subcontractor (PSC)

PSC schemes submit both RTI and CIS returns and ETMP raises separate monthly charges for PAYE liabilities and CIS subcontractor deductions.

Sub-contractors only (XP)

These schemes are not required to submit any RTI returns so will never be brought into RTI. However, they hold an ETMP record receiving the monthly CIS figures from CISR overnight along with details of all tax payments made.