From the HMRC website the Construction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.
When a contractor pays a subcontractor, the contractor may be required to withhold a percentage of the subcontractor's labour charge. The contractor is then required to make a return of the subcontractors paid, and to pay sums withheld, to HMRC on a monthly basis.
The subcontractor can then get a credit for the sums withheld against their annual tax bill or against sums they are required to pay to HMRC for their own subcontractor payments or PAYE.
The steps below explain the flow for contractors, from creating subcontractor bills to submitting a CIS return to HMRC via Clear Books. Each step links to the specific process guidance.
7. You can make payment to HMRC by explaining a payment from an imported statement or bill using the CIS creditor account.
The steps below explain the flow for subcontractors (or contractors who also subcontract), from creating sales invoices to submitting CIS suffered. Each step links to the specific process guidance.