As a subcontractor, you may encounter a term called «CIS Invoice» when working with construction companies in the UK. CIS stands for Construction Industry Scheme, and it is a government initiative aimed at regulating tax payments within the construction industry. As a subcontractor, it is vital to understand what a CIS invoice is and how it differs from a regular invoice.
A CIS invoice is a document that outlines the payment you are due to receive for your work as a subcontractor on a construction project. Unlike regular invoices, CIS invoices need to include specific details, including the contractor`s name and registration number, the subcontractor`s name and registration number, and the total amount of the payment.
Additionally, a CIS invoice needs to include a breakdown of the payment and whether or not it includes VAT. If VAT is included, you need to state the VAT amount separately. If VAT is not included, you need to state that the price is exclusive of VAT.
It is also crucial to include the phrase «CIS Invoice» at the top of the document, so it is clear to the contractor and HM Revenue and Customs that the payment is related to the Construction Industry Scheme.
One significant difference between a CIS invoice and a regular invoice is that CIS invoices need to include the details of the work done and how much of that work was subcontracted. For example, if you were hired to install electrical wiring for a building, you need to state the total cost of the job and the amount of work you subcontracted to other subcontractors. This information is essential as it helps the contractor and HM Revenue and Customs understand how much tax needs to be deducted from your payment.
If you are a subcontractor who is registered for CIS, you can claim back the tax that was deducted from your payment from HM Revenue and Customs. However, to do so, you need to ensure that your CIS invoices are accurate and include all the necessary information.
In conclusion, as a subcontractor, it is essential to understand what a CIS invoice is and how to create one. By including all the necessary information, you can ensure that you receive the correct payment for your work and claim back any tax that was deducted correctly.