Frequently Asked Questions
Your frequently asked questions regarding SHMS Contracting, the Construction Industry Scheme, and more.
Frequently asked CIS questions
The Construction Industry Scheme (CIS) is a tax deduction scheme which is applicable to self-employed workers in the construction industry.
Contractors take deductions from a subcontractor's payment and pass it on to HMRC. This deduction counts towards National Insurance contributions as well as tax.
The main burden of staying compliant in CIS is down to the person making the payments, as this is where there are the most regulations. We take that burden off your hands.
According to the gov.uk website, you are a subcontractor if you do construction work for a contractor.
You are a contractor if you pay subcontractors for construction work. You may also be a contractor if your business does not do construction work but you spend an average of more than £1 million a year on construction in any three-year period.
If you do both, you must register as both.
CIS is required for tax purposes. If you have to pay tax, the Construction Industry Scheme merely makes things easier by deducting money at the source. CIS was primarily designed to stop tax avoidance and evasion amongst the industry, while benefitting subcontractors as it enables them to spread their income tax burden throughout the year.
Is it not optional for contractors to register for the scheme, because they are obliged to take deductions their subcontractors. If you are a contractor, you must follow certain rules including:
- Checking with HMRC if your subbies are registered with CIS.
- Checking if you should employ them instead of subcontracting them.
- Making deductions when you pay your subcontractors.
- Filing monthly returns.
- Keeping full CIS records.
Subcontractors are not obligated to register, but if they do not they will have deductions of 30% taken from them instead of 20%. Therefore, it is in the subcontractor’s best interests to register for CIS.
If you are either a subcontractor or a contractor and your business is based outside the UK but you do construction work in the UK, the same rules apply.
You must have registered before you start work. The process can take up to 6 weeks.
If you are a subcontractor, it is definitely in your best interests to register for CIS. If you register for CIS you only have to pay tax at 20%, but if you don't then you will be deducted 30% . Simply by registering, you could be keeping that extra 10% in your pocket.
What’s more, if you are working outside of IR35 regulations, you can claim certain expenses like travel, food and accommodation, maximising the amount you get to take home at the end of the day.
If you are a contractor, a CIS solution helps you to stay compliant under tax regulations, and takes the burden off and away from you.
Our CIS model 100% guarantees that subcontractors retain their self-employed status. Our solution also enables SHMS to defend any status challenge from HMRC.
In the unlikely event that HMRC successfully demonstrate an employed relationship, then we will cover any National Insurance exposure.
With all the legislation changes over the last few years, there is an ever-increasing risk to construction companies who continue to directly pay their subcontractors, not to mention the additional administrative burden on their business.
For more information, visit our Contractors page.
We put subcontractors at the centre of everything we do and truly value their contribution to our business.
When you choose SHMS, you will be personally welcomed and our experienced team will make sure that we have all your registration details, and that your UTR gets verified. If you don’t already have a UTR, we will advise you how to obtain one.
You will receive Public Liability Insurance and Personal Accident Insurance cover in our already-low margin fee.
For more information, visit our Subcontractors page.
You will be hard pushed to find better margins. Ours stand at £12 per week, £20 per fortnight or £35 per month.
If you are a subcontractor who does not register for CIS, you will be taxed at 30% instead of 20%. That means 10% more of your pay will become tax, instead of what you take home.
If you are a contractor, you MUST register for CIS. However, by using a CIS solution like ours, you can remain compliant and audited and rest assured that you will face no challenges from HMRC - but if you do, that we will cover you.
When you registered with us, you'll have made an account on our portal which can be accessed by logging in with your details at the "Login" button in the menu.
Here is where you'll find your payslips and documents.
Frequently asked questions about SHMS Contracting
We are neither. SHMS Contracting Ltd is an Inland Revenue-approved 20% deduction (or gross labour-only) subcontractor that operates within the Construction Industry Scheme, if the subcontractor fulfills all of the necessary self-employment criteria.
No, subject to our regular checks. Their contracts are with us, not you, and you receive the full protection of the Companies Acts if the subcontractor fulfills all of the necessary self-employment criteria. If not, then we'll pay them as employees.
No. There is no entitlement to either contractual or statutory holiday pay, as they are self-employed labour-only subcontractors.
We pay subcontractors by BACS transfer; either weekly, fortnightly or monthly as required.
You can pay SHMS by BACS or CHAPS payment.
SHMS Contracting Ltd's dedicated verification department will verify subcontractors. You just need to verify us as a subcontractor.
SHMS Contracting Ltd operates two separate CIS-limited companies to give you the option of either paying us Net of 20%, or Gross. On application, let us know which option you prefer and we'll provide details of the relevant company.
No. There is absolutely no set time commitment or tie-in. We provide a pay-as-you-use service for which there is no notice required to terminate our agreement.
You pay absolutely nothing to sign up! There are no sign-up costs or exit fees.
Yes, you do. VAT will be payable on all services we provide.
Yes. If the self-employed subcontractors do not hold their own liability insurance, then SHMS Contracting Ltd can provide a low-cost weekly/fortnightly/monthly insurance cover for the time they are paid by us.
Whilst processing payments, SHMS Contracting Ltd retain a small margin. As we retain this at the source, it isn't taken from an individual's earnings and they do not pay any tax on it.* Depending on their pay frequency our margin is:
- Weekly paid - £12 gross.
- Fortnightly paid - £20 gross.
- Monthly paid - £35 gross.
All policies include Personal Accident Insurance and Public Liability Insurance.
*A nominal £1/week is allowed for each insurance policy when calculating the CIS tax deduction.
Questions about our portal
Sometimes your saved cache can have an effect on the portal. Try clearing your cached data in your browser.
Alternatively, try a different device. Our portal is compatible with smartphones, tablets, and desktops. If it's not working on one device, you could try a phone, laptop or tablet if you have one.
If you've tried this and you're still having problems, get in touch with us and we'll do our best to help.
We can easily get this sorted out for you. Drop us an email with the email address you used to register onto the portal, your name, UTR and NI number and we'll get back to you.
The portal is an area where subbies can log in and view their payment history, CIS deductions and documents and make amendments.
You'll need details at hand including your UTR, National Insurance number, address, bank details and next of kin. We have a portal registration guide here which will show you all the information you'll need to register with.
Still have a question? Contact us and we'll do our best to answer it for you!