Common Mistakes To Avoid When Filing Your CIS Tax Return


The Construction Industry Scheme (CIS) is crucial for those in construction. It mandates contractors to deduct money from subcontractors’ payments for tax and National Insurance purposes. This process helps ensure tax compliance within the industry. In this blog, we’ll delve deep into the subject for your understanding.

Speak to our expert chartered accountants to discuss CIS tax returns. We know it inside out, and we can help you with the process with the utmost efficacy. Call 01322 250 001 or email today. You can also fill out a quick form here for a free consultation.

What Is CIS?

The Construction Industry Scheme (CIS) is a tax deduction initiative established by HMRC (His Majesty’s Revenue and Customs) to streamline tax payments within the construction sector.

Under CIS, contractors are required to deduct money from subcontractors’ payments to cover tax and National Insurance contributions. These deductions are then submitted to HMRC. This system aims to improve tax compliance and reduce evasion in the construction industry.

Contractors must register for CIS if they hire subcontractors or have spent over £3 million on construction within the past 12 months. Subcontractors can register as well, benefiting from a lower deduction rate of 20% compared to 30% for unregistered subcontractors. Registration ensures accurate tracking and allocation of tax payments.

CIS applies to a wide range of construction activities, including building, repairs, demolition, and related services. Understanding and adhering to CIS requirements is crucial for both contractors and subcontractors to avoid penalties and ensure proper tax management.

CIS tax returns on your mind? Worry not – our expert accountants at Adams Accountancy are here to help you with the complete process!

Common Mistakes To Avoid When Filing Your CIS Tax Return

1. Incorrect Deductions

One of the most frequent mistakes is deducting the wrong amount from subcontractors’ payments. This can happen if you miscalculate the percentages or fail to update the deduction rates as per HMRC guidelines.

Incorrect deductions can result in both underpayment and overpayment issues. Underpayment can lead to penalties and interest charges, while overpayment can strain your cash flow and create administrative burdens.

Always verify the current deduction rates and double-check your calculations to ensure accuracy in your CIS returns.

2. Missing Deadlines

Filing your CIS returns late can result in significant fines and penalties from HMRC. Deadlines for monthly CIS returns are strict, and missing them, even by a day, can incur automatic penalties.

Late submissions can also trigger further scrutiny of your tax affairs, leading to more detailed inspections and potential additional penalties. To avoid this, set reminders and implement a robust tracking system to ensure all returns are filed on time.

Staying organised and proactive about deadlines can save you from unnecessary financial and administrative burdens.

3. Inaccurate Records

Accurate records of all transactions, including payments and deductions, are essential for correctly completing your return. Missing or incorrect information can lead to errors that might attract penalties from HMRC. To avoid this, maintain detailed records and regularly update them.

Consider using accounting software to streamline record-keeping processes and ensure all financial data is accurately recorded and easily accessible for your CIS returns. At Adams Accountancy, we are a technology-focused team and can help you with accurate records of your data.

4. Incorrect UTR

Using the wrong Unique Taxpayer Reference (UTR) numbers for subcontractors is a frequent error that can cause delays and complications in processing your CIS returns. Each subcontractor’s UTR is crucial for HMRC to accurately track tax deductions and payments.

Incorrect UTRs can result in misallocated payments and potential penalties. Always verify the UTR numbers provided by subcontractors and double-check them before submission. Implement a verification process to ensure all UTRs are correct and correspond to the respective subcontractors to avoid any administrative issues.

5. Failing To Verify Subcontractors

HMRC requires that all new subcontractors be verified to ensure the correct tax rate is applied. Neglecting this step can lead to financial discrepancies and potential penalties.

Always verify subcontractors before their first payment and keep records of these verifications to ensure compliance and accurate deductions in your CIS returns.

A Quick CIS Tax Return Checklist To Keep Handy

  • Verify all subcontractors with HMRC.
  • Ensure correct UTR numbers for all transactions.
  • Keep detailed records of all payments and deductions.
  • Track all CIS return deadlines.
  • Double-check all deductions for accuracy.
  • Keep copies of all filed returns and related documents.

Contact Adams Accountancy


How Can We Help?

Navigating the complexities of the Construction Industry Scheme (CIS) can be challenging without expert guidance. Our team of seasoned professionals specialises in assisting both contractors and subcontractors with their CIS obligations.

We understand the intricacies of the scheme, ensuring you apply the correct deduction rates and maintain compliance with HMRC requirements. Our services are tailored to meet your specific needs, whether you require help with accurate record-keeping, timely submissions, or verifying subcontractors.

As ICAEW Chartered Accountants, we offer bespoke advice and support to each and every client. We adapt our services to your unique circumstances rather than providing one-size-fits-all packages.

Our goal is to simplify the CIS process for you, thus reducing the risk of errors and penalties. With our accountants’ expert assistance, you can focus on your core business activities, confident that your tax affairs are in capable hands.

Call 01322 250 001 today to learn more about how we can help streamline your CIS compliance.


Filing your CIS tax return accurately and on time is essential to avoid penalties and ensure compliance. By understanding common mistakes that we have listed in this article and keeping a detailed checklist, you can manage your CIS obligations effectively.

For professional assistance, our expert team is here to help you navigate the complexities of the CIS. Contact Adams Accountancy today to learn more about our services tailored to the construction industry in Bexley.