If you work in the construction sector, you’re probably already familiar
with the Construction Industry Scheme (CIS). But why should you outsource your CIS payroll?
HMRC defines ‘construction’ as including building, roofing, groundwork, and plastering, as you might expect them to. In addition, there are many other services, such as:
- Scaffolding (erection and dismantling)
- Painting and decorating
- Repairs, maintenance, and extensions
- It even includes tree planting when carried out as part of a building project.
You must register and comply with CIS rules if you engage any of the above-mentioned contract workers. A subcontractor is not required to register with the CIS, but failing to do so will result in a higher tax rate (30 percent instead of 20 percent).
Tax is deducted at source from payments to subcontractors under CIS, exactly like it would be for PAYE-eligible workers. You’ll need a lot of help from your HR/payroll team to get to that position. They’ll have to do the following:
- Make sure that your subcontractors are indeed subcontractors and not just “de facto” employees
- Check that the sub-contractor is CIS registered
- Calculate tax and NI deductions for your business
- Pay HMRC the money you have deducted
- Keep records and submit monthly tax returns.
- Make timely payments to all of your subcontractors.
How can outsourcing help me?
Outsourcing your payroll eliminates a huge list of tasks that would otherwise have to be completed in-house. This benefit is evident and immediate. Outsourcing payroll involves more than just that, however:
- You get real expertise in an area that’s essential to get right. Keep the payroll in-house and it becomes one of many duties that need completing. Outsource and you apply dedicated expertise to getting it right first time, so you can focus on the core business
- You cut the cost of processing payroll
- You lock in legal compliance, so you don’t face any nasty surprises. And if a payroll error does occur, your payroll provider carries the can, not you
- You never miss a payment deadline
- There’s no limit to the number of sub-contractors you can place on outsourced payroll
- When CIS legislation changes (as it has repeatedly over the years) your payroll provider is on top of it, so you don’t need to worry about missing anything.
Kim Redwood-Lee says “Eaziserv, the CIS payroll service, prevents HMRC from reclassifying main contractor’s self-employed sub-contractors as employees. It manages workers self-employed status, while removing tax and NI liabilities and provides complete protection from HMRC employment status investigation”.
About Oscar Fairchild: Oscar Fairchild (incorporating Redwood Clarke since 01.09.18) is an ACCA chartered and certified and AAT qualified accountancy, financial consultancy & bookkeeping practice with offices in The City of London, and Billericay, Essex. Offering a wide range of services including Self-Assessment Services, Annual Returns, VAT Returns, Credit Control, Payroll, Auto Enrolment Pension and Management Account services to high growth businesses and licensed London taxi drivers across London, Essex and Hertfordshire.