Guide to the Employer Payment Summary (EPS) – for Limited Companies within the CIS

Guide to the Employer Payment Summary (EPS) – for Limited Companies within the CIS

by Daniel at Taxfile.

Understanding the Employer Payment Summary (EPS) monthly claims for limited companies within the CIS

Limited company contractors operating within the Construction Industry Scheme (CIS) have distinct payroll obligations, including the submission of their Employer Payment Summary (EPS). In today’s guide, we’ll explain what the EPS is, its purpose, and the submission rules limited companies have to follow if they work within the Construction Industry Scheme.

What is the EPS?

The Employer Payment Summary serves as a crucial mechanism for limited company contractors to report additional payments, deductions, and adjustments to HM Revenue & Customs (HMRC) alongside their regular payroll submissions. While all such employers submit a monthly EPS, limited company contractors operating under CIS have specific considerations due to their status and the nature of their work within the construction industry.

The purpose of submitting monthly EPSs for Limited Company Contractors in the CIS

The primary purpose of EPSs for limited company contractors operating within the CIS is to provide HMRC with accurate information about deductions suffered under the Construction Industry Scheme. By submitting each monthly EPS for CIS, limited company contractors also ensure compliance with CIS regulations and provide HMRC with essential data for tax calculations and entitlements.

Submitting an EPS for Limited Company Contractors working within the CIS

Limited company contractors operating within CIS are required to submit an EPS to HMRC every month, even if there are no adjustments to report. EPSs should be submitted after the end of the tax month but before the 19th of the following month, in line with HMRC guidelines.

Contractors can use HMRC’s online services or compatible payroll software to submit their monthly EPS for CIS. It’s crucial to ensure that the information provided in each EPS accurately reflects the deductions suffered under CIS.

The CIS deductions suffered sent through an EPS are promptly reflected as a credit on the PAYE account. This credit will then be utilised to set off against other liabilities, including PAYE tax, National Insurance Contributions (NIC), and subcontractor’s tax submitted through the CIS300 return.

When sending the EPS you can also claim Employment Allowance and recover statutory payments that exceed the amount of PAYE due.

Submitting EPSs late may lead to penalties imposed by HMRC, which can vary based on the extent and frequency of delays.

CIS Contractor's Monthly Return (CIS300) - Explained

CIS Contractor’s Monthly Return (CIS300)

CIS Contractor's Monthly Return (CIS300) - Explained

by Daniel at Taxfile.

The CIS Contractor’s Monthly Return is a mandatory requirement for contractors operating within the Construction Industry Scheme (CIS). It acts as a mechanism for contractors to disclose to HM Revenue and Customs (HMRC) payments issued to subcontractors and the corresponding tax deductions withheld from those payments. By providing HMRC with information regarding payments rendered and the accompanying tax deductions, the CIS Contractor’s Monthly Return guarantees transparency and adherence to regulations within the construction sector. In today’s guide, we explain the various components of the monthly ‘CIS300’ return, how the process works, key deadlines, the ramifications of non-compliance, and much more.

Key Components of the Monthly Return

The CIS Contractor’s Monthly Return typically includes the following key components:

This section includes information about the contractor, such as their name, Unique Taxpayer Reference (UTR), and contact details. Ensuring accuracy in this section is crucial for HMRC’s records and communication purposes.

Contractors must provide details of all subcontractors they have engaged during the reporting period. This includes the subcontractors’ names, UTRs, and payment amounts.

Contractors must report the total payments made to each subcontractor during the reporting period. This information helps HMRC track payments within the construction industry and verify compliance with tax obligations.

Contractors are required to calculate and report the tax deductions made from payments to subcontractors. The deducted amounts are typically based on the subcontractors’ verification status and tax treatment under the CIS.

The Monthly Return concludes with the calculation of the total amount due to HMRC, taking into account the tax deductions made from payments to subcontractors.

Deadlines and Reporting Periods

The CIS Contractor’s Monthly Return deadlines follow a structured timeline, which includes:

  • The submission deadline — contractors must submit their Monthly Returns to HMRC by the 19th of each month following the end of the reporting period. (Contractors’ payments to HMRC must also be made by this date).
  • The reporting period covered by each Monthly Return — which typically spans from the 6th of the previous month to the 5th of the current one.

Making Your CIS Payments to HMRC

Once you’ve calculated the total CIS deductions, prepare to make the payment to HMRC. You will need to have the following information ready:

  • Your Unique Taxpayer Reference (UTR) number;
  • Your payment reference, which is your 13-character Accounts Office reference number followed by the letter ‘C’ (e.g., 123PA12345678C);
  • The amount you’re paying.

HMRC offers various payment options for settling your CIS liabilities, which are explained here.

  • A contractor who operates as a limited company and also acts as a subcontractor might find that they are exempt from making any payments to HMRC. Subcontractors who do not have gross payment status will incur CIS deductions, which can then be used to offset any CIS payments owed to HMRC. This is exclusively available to limited companies. Please look out for our forthcoming blog focused on the CIS claim — a hyperlink will follow here once it’s live.

Implications of Non-Compliance

Failure to meet CIS Contractor’s Monthly Return deadlines can lead to various consequences, which may include the following:

  • Penalties — HMRC may impose penalties for late or non-submission of Monthly Returns, which can escalate over time.
  • Loss of benefits — non-compliance with CIS obligations, including Monthly Return deadlines, can lead to loss of benefits such as gross payment status, affecting contractors’ cash flow and competitiveness.

Managing the CIS Monthly Return Process

For contractors, efficiently managing the CIS Contractor’s Monthly Return process involves the following steps:

1. Maintain Accurate Records

Contractors should maintain accurate records of payments made to subcontractors and tax deductions applied. This includes keeping track of invoices, receipts, and CIS statements.

2. Timely Submission

The Monthly Return must be submitted to HMRC by the 19th of each month following the end of the reporting period. Contractors should ensure timely submission to avoid penalties and maintain compliance.

3. Use HMRC Online Services

HMRC provides online services for submitting CIS returns, making the process convenient and accessible for contractors. Registering for and using these online services can streamline the submission process and reduce administrative burdens.

The CIS Contractor’s Monthly Return is the key tool through which to report payments and tax deductions accurately to HMRC. Understanding its components and effectively navigating the submission process helps to ensure that contractors are compliant — and also avoids unnecessary penalties.

Rest assured, though: Taxfile is here when you need help with CIS returns and accountancy for construction workers, bookkeeping, CIS tax rebates for subcontractors, limited company accounts, and any tax-related matters that require professional help. We’re happy to provide guidance on compliance requirements, tax calculations, record-keeping practices, and much more.

CIS sub-contractor refunds

CIS Sub-contractors – Claim Your Tax Refund Now!

CIS sub-contractor refunds

[Updated April/May 2022]: It’s now time to start the process of claiming your tax refund if you are a sub-contractor working within the Construction Industry Scheme (‘CIS’). Refunds are usually fast through Taxfile.

What you need to do

Don’t delay – book an appointment with Taxfile today by calling 0208 761 8000 and we’ll sort it all out for you. We have staff who speak English, Polish, Pashto, Dari, Russian, French, and Dutch, should you need them on the day. Our Tulse Hill office is at 25 Thurlow Park Road, London SE21 8JP. Call 0208 761 8000 for an appointment — the first 20 minutes is free! Alternatively, you can have a ‘virtual’ appointment with us on Zoom, Teams, Google Hangouts, Skype, FaceTime, WhatsApp or whatever you prefer.

Outside of London? No problem – click here.

We’re open from Monday to Saturday in April & May (including early evenings Mon/Tues)

Our Tulse Hill office is open 6 days a week during April & May and offers Saturday morning appointments plus early evening appointments on Mondays and Tuesdays if standard office hours do not suit you (please call for details).

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How we harness technology at Taxfile in Tulse Hill, Dulwich, Devon & Cornwall

Harnessing Technology at Taxfile

How we harness technology at Taxfile in Tulse Hill, Dulwich, Devon & Cornwall

The rapid pace of technological change has caused some of the biggest shifts in how we view and process our tax returns. At Taxfile, we’re constantly striving to use technology as effectively as possible to aid us in collecting, analysing, and collaborating when working on your personal data.

Over the pandemic, we’ve had to place our reliance even further on technology to maintain our standards, with regular meetings online. We’re constantly improving the efficiency of our work pipeline and, with the ability to pull figures directly from online bank statements, we can ensure precision in the numbers we present you with. For the last two years, we’ve implemented cloud technology as both a collaborative tool between our senior and junior staff and as storage for various databases used to track everything from employee working hours to the status of your tax return. We’re expanding further on this concept in collaboration with Pure Technology by merging our existing cloud systems with our current remote work solution to form one, all-encompassing workspace environment. Hosting it in the Microsoft Cloud ensures that, with the help of our office staff, your paperwork and bookings can be sent to and viewed by your tax agent as soon as possible. This and a variety of other endeavours are examples of our ambitions to be at the forefront of innovations, and constant review of our policies ensures we remain ahead, or on track, to meet the standards set by Making Tax Digital (MTD) for its 2023 launch.

Contact South London’s Favourite Accountant

Taxfile can help you with all your tax or accountancy requirements. We offer Read more

Latest e-Newsletter Confirms Important Updates

Latest News on Gov. Grants, Support, Loans, Deadlines & More

Latest e-Newsletter Confirms Important Updates

Don’t miss our latest newsletter. Published just this week, it includes several updates on the latest Government support for small businesses during the pandemic, including:

  • a possible 4th SEISS grant coming for the self-employed and …
  • extensions of both the Job Retention Scheme (‘furlough’) ….
  • and Bounce-Back Loan Scheme.
  • There’s also a useful link where you can check what help may be available to you using a simple but genius interactive interface.

The newsletter also includes imminent deadlines that may affect you and news about a significant VAT change that will affect the entire Construction Sector.

Have you submitted your Self-Assessment tax return for the year 2019-20? It’s due in a few days! Learn more in the newsletter or get the ball rolling here.

Have you paid any tax you owe for the same period? It’s now overdue if not. Also see the newsletter for more information contact us using the yellow buttons below.

Learn much more about all these topics and more in our latest e-Newsletter, which can be viewed here. For help with any tax or accounting related issue, simply contact us and we’ll be happy to help. Choose an option below …

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T: 020 8761 8000

Domestic Reverse Charge for the Construction Sector

The Domestic Reverse Charge (DRC) for the construction sector comes into effect as of 01/03/2021.

What does this mean for you?

If you are VAT registered & you work falls under the Construction Industry Scheme (CIS) then from the 1st of March you will need a written declaration from your contractor that they are classified as an end user.

An end user simply put is the land owner or an intermediary company with a direct link to the land owner.

If they are classified as the end user then nothing changes and VAT will be paid to you to then declare on your VAT returns.

However, if you are not working for the end user, the VAT will not be paid to you and it will be your contractors responsibility to declare the VAT from your invoice to HMRC.

If you are on a flat rate scheme and some or all your work falls under the DRC then we advise you to consider writing to HMRC and cancelling your flat rate scheme for VAT.  If the majority of your work is not for the end user, then most definitely do this immediately or call us and we can advise you.

If you need help understanding the DRC and how it applies to you then please do not hesitate to contact us on 020 8761 8000.

At Taxfile we specialise in the construction sector, calculating and submitting Making Tax Digital (MTD) compliant VAT returns for numerous sole traders and limited companies.  If you are looking for an accountant to manage your MTD VAT returns, then we can help you.

Further Delays on the Roll-Out of the Domestic Reverse Charge for the Building & Construction Services.

The domestic reverse-charge is a major change to the way VAT is collected by HMRC in the building and construction industry reporting under the Construction Industry Scheme (CIS).

It was being introduced to combat VAT fraud in the sector and the initial roll-out on 1st October 2019 was delayed due to a combination of the sector being ill-prepared for the change and Brexit. The date was moved forward 12-months to 1st October 2020 but due to COVID-19 the start date has been further advanced to 1st March 2021.

At Taxfile, we will start contacting our VAT clients working under the CIS, in preparation for the 1st March 2021 start date.

If you would like to know how to prepare your business for this, you will need to: Read more

Tax Returns for Self-Employed Londoners - Special Offer

Tax Returns for Self-Employed Londoners – Special Offer!

Tax returns for self-employed Londoners - Special Offer!
Are you self-employed? Are you late filing your 2018/19 Self-Assessment tax return? If so, now is the time to get Taxfile to sort it out for you.

There are 4 important reasons why you should file your tax return now:

1. Save money, with our special offer!

For a very limited time, we are offering to do 2018-19 Self-Assessment tax returns for self-employed Londoners for just £199 + VAT (our usual pricing is from £277 + VAT). That’s a saving of nearly £94 including VAT.

2. Stay eligible for Government Help during the lock-down

Self-employed people who are struggling financially during the coronavirus lock-down may be eligible for financial help from the Government. This is in the form of their recently announced Self-Employed Income Support Scheme (‘SEISS’). However, to remain eligible, you must have filed your 2018/19 Self-Assessment tax return by 23 April. If you miss that deadline, you will no longer be eligible for that Government assistance.

3. Avoid severe fines from HMRC for being so late

The original deadline for submission of your 2018/19 Self-Assessment tax return was actually 31 January 2020. So, if you didn’t already file your tax return by that date, you already owe HMRC a fine of £100 minimum. That’s nothing, though, compared to the penalties they will start charging you after April. From 1 May, you will owe an additional £10 per day, every day from that date if you still haven’t filed your 2018/19 tax return. So, for example, after a week you’ll owe the original £100 plus an additional £70 as a minimum, or the £100 plus a further £140 after two weeks and so on. You may also be charged interest on top of all of that if you owed HMRC a tax payment on the original 31 January deadline and still haven’t paid it.

4. You may be due a tax rebate

Some self-employed people may be due a tax rebate. This depends upon your

Domestic Reverse Charge for VAT within the Construction Industry Scheme

IMPORTANT UPDATE!

On 06/09/2019 HMRC announced that the Domestic Reverse Charge will be postponed for 12 months and will come into effect 01/10/2020.   Their official statment;

“To help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 1 October 2020. This will also avoid the changes coinciding with Brexit.”

———————————-

From 1st October 2019 HMRC will introduce the Domestic Reverse Charge for VAT returns within the construction industry if certain criteria are met.

HMRC states it is aware of the large scale fraud that has occured within the industry, whereby construction businesses charge VAT for their services but then disappear without paying their VAT bill, taking with them the 5% or 20% as additional profit.  They have also managed to under cut their prices against  many businesses working legitimately with the knowledge that they will have this additional ‘profit’.  Therefore,  by moving the VAT charge down the supply chain, HMRC intends to make this kind of fraud impossible.

Any company that is VAT registered and works under the Construction Industry Scheme (CIS) providing the following services may be subject to the Domestic Reverse Charge;

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours
  • pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
  • painting or decorating the inside or the external surfaces of any building or structure
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

Services excluded from the Domestic Reverse Charge include;

  • drilling for, or extracting, oil or natural gas
  • extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose
  • manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site
  • manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site
  • the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants
  • making, installing and repairing art works such as sculptures, murals and other items that are purely artistic
  • signwriting and erecting, installing and repairing signboards and advertisements
  • installing seating, blinds and shutters
  • installing security systems, including burglar alarms, closed circuit television and public address systems

The final criteria is whether the service being provided is to the the ‘end-user’ or ‘intermediary supplier’.  If it is then the normal way of charging VAT applies, if not, then the Domestic Reverse Charge applies.  Please see the flowchart below to see if the Domestic Reverse Charge applies to you:

What is an ‘End User’?

For reverse charge purposes consumers and final customers are called end users. They are businesses, or groups of businesses, that do not make onward supplies of the building and construction services in question, but they are registered for CIS as mainstream or deemed contractors because they carry out construction operations, or because the value of their purchases of building and construction services exceeds the threshold for CIS.

What is an ‘Intermediary Supplier’?

Intermediary suppliers are VAT and CIS registered businesses that are connected or linked to end users.

To be connected or linked to an end user, intermediary suppliers must either:

  • share a relevant interest in the same land where the construction works are taking place
  • be part of the same corporate group or undertaking as defined in section 1161 of the Companies Act 2006

It will be your responsibility to ask your contractor whether they are the end user or intermediary.

If they are not, then you will not receive the VAT for the supplies being provided.  This will effect your cash flow.  Furthermore, if you are on a flat rate scheme, then the scheme will more than likely no longer be beneficial for you.  If your sales are subject to the domestic reverse charge, then you would be considered as a regular repayment trader and could enrol on a monthly VAT return scheme to ease your cash flow by getting the VAT paid back to you on your expenses.

As the supplier, you will need to issue VAT invoices that clearly indicate the supplies are subject to the domestic reverse charge and that the customer is required to account for the VAT. The VAT due should be clearly stated however should not be included in the amount shown as total amount charged.

If the domestic reverse charge applies, invoices should clearly indicate the reverse charge applies using the correct terminology. HMRC suggests businesses use any of the following:

  • Reverse charge: VAT Act 1994 Section 55A applies
  • Reverse charge: S55A VATA 94 applies
  • Reverse charge: Customer to pay the VAT to HMRC

It should be clear on the invoice that the reverse charge mechanism has been applied.

You invoice should still show all the usual information required for a VAT invoice.

The legislation stipulates that if there is a reverse charge element in a supply then the whole supply will be subject to reverse charge if the parties agree. It will also cover the provision of construction services that includes materials.

There is no minimum threshold from which the reverse charge would apply.

Please contact us on 020 8761 8000 or email ali.asilzadeh@taxfile.co.uk if you would like to discuss how the domestic reverse charge will effect your business.

The Early Bird Gang

HMRC expects people to do tax returns for various reasons;

  • Those that have an income outside of a PAYE scheme (i.e. self-employed)
  • High earners on PAYE schemes, earning above £100K
  • Company Directors & Shareholders
  • Landlords who have rental incomes

The tax returns calculated generally run between the dates 06/04/xx through to 05/04/xy, the calculation, submission, and payment deadline  of taxes owed to HMRC (or you), would need to be submitted at the latest 31/01/xz, before penalties & interest are imposed.

Each year, the Government announces a tax free allowance, which is the amount you can earn before your income starts to get taxed.  The tax free allowance for 2018/19 is £11,850.00.  However, this allowance decreases by £1 for every £2 earned above £100k, meaning by the time your reach £125K, the allowance is £0.

The amount of tax paid on income is also specified by the government & is subject to change with announcements made generally in the Budget statements.  For 2018-19 the rates are as follows;

Tax Rate (Band) Taxable Income Tax Rate
Personal allowance Up to £11,850 0%
Basic rate £11,851 to £46,350 20%
Higher rate £46,351 to £150,000 40%
Additional rate Over £150,000 45%

*For 2019-20 the new rates & tax free allowance can be found HERE.

Since 6th April 2019, you would have been able to calculate & submit your 2018/19 tax return to HMRC, so since then the Tax Agents at Taxfile have been busy filing away for the early birds.   We have been open on Saturdays too, to keep up with the influx of tax returns & CIS returns.

However, the last Saturday that we will be open will be 29th June.  If you would like to join our ‘gang’ of Early Bird & can only come in on Saturdays, you only have a few weekends left.

Please note, on Saturdays, all our agents see clients by appointment only, and can not generally deal with walk-in clients.  So please book in advance by either calling 020 8761 8000 or booking online HERE.

So get our professional help at Taxfile & we’ll make filling in and filing your tax return a breeze.

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