Working in construction means dealing with the Construction Industry Scheme (CIS). It's just how HMRC makes sure tax gets paid in the building trade. But here's the thing: staying compliant isn't just about avoiding trouble with the taxman. It's actually the key to getting bigger refunds back in your pocket.
Let's break down everything you need to know about CIS compliance without the confusing jargon.
What Is CIS Compliance (In Plain English)?
CIS compliance means following HMRC's rules for how contractors and subcontractors handle tax deductions in construction. Think of it as a checklist you need to tick off throughout the year.
When you're registered with CIS, contractors take money from your pay before you get it. Usually 20% if you're registered, or 30% if you're not. That money goes straight to HMRC to cover your tax bill.
Here's where it gets interesting: most subcontractors overpay their tax through these deductions. When you're compliant and file properly, you can claim that overpayment back. We're talking thousands of pounds in many cases.
The 5 Core Rules of CIS Compliance You Can't Ignore
1. Register for CIS Before You Start Working
You need to register as soon as you start doing construction work. This drops your deduction rate from 30% down to 20%. That's an extra 10% in your pay packet every month.
How to do it: Call HMRC on 0300 200 3210 (the CIS registration phone number) or register online through your Government Gateway account. It takes about 10 minutes.
Tip: Keep your CIS registration number safe. You'll need it for every job.
2. Keep Every Single Receipt and Invoice
HMRC wants proof of your business expenses. No receipt means no deduction. No deduction means you pay more tax than you should.
What to keep:
- Fuel receipts for work travel
- Tool purchases
- Van costs (insurance, repairs, MOT)
- Work clothing and safety gear
- Phone bills (if you use it for work)
- Accountancy fees
How to avoid problems: Use a shoebox, an app, or even just take photos of receipts. Just don't lose them.
3. File Your Self-Assessment Tax Return Every Year
This is non-negotiable. The deadline is 31st January every year for the previous tax year (which runs April to April).
Missing this deadline costs you £100 immediately, even if you don't owe any tax. Wait longer, and the penalties stack up fast.
The bigger picture: Your tax return is how you claim your CIS refund. No return filed means no refund paid out, even if HMRC owes you money.
4. Keep Accurate Records of All CIS Deductions
Every month, your contractor should give you a CIS statement showing how much tax they've taken from your pay. Keep these safe.
At the end of the tax year, you'll need them to fill in your self-assessment. They prove how much tax you've already paid through CIS deductions.
Warning: If you can't prove your deductions, HMRC might not give you credit for them. That means paying tax twice on the same earnings.
5. Separate Your Business and Personal Expenses
HMRC gets suspicious when they see personal spending mixed in with business claims. Using your works van to pop to Tesco? That's fine. Claiming your entire weekly shop as a business expense? That's asking for trouble.
Best practice: Get a separate bank account for your business. It makes everything cleaner and easier to track when claiming CIS refund time comes around.
How Compliance Actually Maximizes Your Refund
Being compliant isn't just about avoiding fines. It's the foundation for getting the biggest refund possible. Here's how:
You can claim all allowable expenses. When your records are solid and your paperwork is organized, you can confidently claim every legitimate business cost. These expenses reduce your taxable income, which increases your refund.
HMRC processes compliant returns faster. A properly filed return with clear records gets paid quicker. Messy returns get flagged for checks, which means waiting months for your money.
You avoid penalties eating into your refund. Late filing penalties start at £100 but can reach over £1,600. That's money straight out of your refund.
You build a good track record. Consistent compliance means HMRC trusts your returns. This matters if you ever get selected for a compliance check.
The Biggest Compliance Mistakes Costing You Money
Mistake #1: Not Registering for Gross Payment Status
If you've been in the game a while and you've got your tax affairs in order, you might qualify for gross payment status. This means contractors pay you in full without taking any deductions.
Requirements:
- You've passed HMRC's compliance test
- You've filed tax returns on time
- You've paid your tax bills when due
The benefit: You keep all your money upfront instead of waiting until January for a refund.
Mistake #2: Treating All Income the Same
Not all money you earn might fall under CIS. Some jobs might be outside the scheme. Mixing them up on your tax return causes problems.
Tip: Ask your accountant about this. Getting it wrong can trigger HMRC investigations.
Mistake #3: Forgetting About CIS Self-Assessment Support
Doing your own return sounds like it saves money. But one mistake can cost you hundreds or thousands in missed refunds or penalties.
Professional CIS self-assessment support means someone who knows the construction industry inside out checks everything. They spot allowable expenses you might miss and make sure every deduction is claimed correctly.
What Happens If You're Not Compliant?
HMRC doesn't mess about with CIS compliance. Here's what you're risking:
Immediate penalties: £100 for late filing, increasing the longer you wait.
Interest on unpaid tax: Currently around 7.75% on anything you owe.
Reduced refunds: If you can't prove your expenses, you don't get to claim them.
Compliance checks: HMRC might investigate your returns for multiple years. This is stressful, time-consuming, and expensive if they find errors.
Losing your CIS registration: In serious cases, HMRC can deregister you, bumping you back to 30% deductions.
Getting Help Stays You Compliant (And Maximizes Your Refund)
Look, you're brilliant at your trade. But tax compliance is a full-time job in itself. The rules change constantly, and one small mistake can be expensive.
This is where specialist help makes sense. At CIS Assist, we work exclusively with construction professionals. We know exactly what expenses you can claim, how to structure your returns, and how to keep HMRC happy.
Our approach is simple:
- No upfront fees. We work on your refund, not before it.
- We handle all the paperwork and communicate with HMRC for you.
- We maximize every legitimate claim to get you the biggest refund possible.
- We keep you compliant year-round, not just at deadline time.
Every week, we help subcontractors just like you claim thousands in CIS refunds they didn't even know they were owed.
Your Next Steps for CIS Compliance
Here's your action plan:
1. Register for CIS if you haven't already. Use the CIS registration phone number (0300 200 3210) or do it online.
2. Start keeping proper records today. Get a folder, a box, or use your phone. Just start collecting receipts.
3. Mark 31st January in your calendar. Set reminders for a few weeks before. Don't leave it to the last minute.
4. Work out if doing it yourself makes sense. If your situation is straightforward, you might be fine. If you've got multiple income streams, lots of expenses, or you've fallen behind, get professional help.
5. Focus on claiming CIS refund properly. Don't leave money on the table because your return wasn't complete or accurate.
The construction industry is tough enough without losing money you've already earned. CIS compliance isn't exciting, but it's the difference between getting a decent refund and leaving thousands with HMRC.
Ready to get your CIS sorted and maximize your refund? Visit CIS Assist to see how we can help, or check out our services page to learn more about our no-upfront-fee approach. Your refund is waiting.
