Quarterly BAS Due (July–September)
Form 1099-NEC & Contractor Payment Reporting Check
Why this matters.
The Construction Industry Scheme, set out in the Finance Act 2004 and HMRC’s CIS340 guidance, requires most contractors in the building trade to deduct money from a subcontractor’s payments and pass it to HMRC as an advance towards the subcontractor’s tax and National Insurance. Contractors must register with HMRC before taking on their first subcontractor, verify each subcontractor’s CIS status before paying them, and deduct 20% (registered), 30% (unregistered) or 0% (gross payment status) accordingly. Contractors must also file a CIS300 monthly return by the 19th of each month, even in months with no payments, and file a nil return if nothing was paid — missing this triggers an automatic £100 penalty that escalates the longer it stays outstanding. HMRC significantly tightened the rules from April 2024, adding VAT compliance to the tests a business must pass to keep or obtain gross payment status, and has been actively removing gross payment status from businesses that fall behind on VAT, PAYE, or Corporation Tax obligations — a change that has caught out a number of established contractors who assumed their status was secure. With HMRC continuing to prioritise CIS in its compliance activity, and Making Tax Digital extending further into small business reporting, getting subcontractor verification, deduction rates, and monthly returns right is increasingly important for any business that pays others to carry out construction work, including many activities — like site preparation, repairs, and demolition — that businesses don’t always realise fall within scope.
