How Can an Accountant Help with CIS Bookkeeping?

Bookkeeping under CIS can be complex. Discover how an accountant can manage your records, handle deductions, and keep you compliant with HMRC.

Introduction

Bookkeeping under the Construction Industry Scheme (CIS) can be challenging for many contractors and subcontractors. With specific tax deductions, verification rules, and reporting requirements, it is easy to make mistakes that lead to penalties or missed tax refunds.

An accountant experienced in CIS can make the process much easier by managing your records, ensuring compliance with HMRC, and helping you stay organised throughout the year. This article explains how an accountant can help with CIS bookkeeping, what responsibilities they handle, and why outsourcing this work can save you time and money.

Understanding CIS Bookkeeping

The Construction Industry Scheme applies to payments made between contractors and subcontractors in the construction sector. It requires contractors to:

  • Verify their subcontractors with HMRC before making payments.

  • Deduct tax from subcontractor payments at either 20% or 30%.

  • Pay these deductions to HMRC.

  • File monthly CIS returns showing payments and deductions.

Subcontractors must keep accurate records of payments received and deductions made, as these are used to claim back overpaid tax when filing their Self Assessment.

Bookkeeping for CIS involves recording all these details accurately — including invoices, payments, deductions, and verification checks — to ensure HMRC receives the correct information.

How an Accountant Can Help Contractors

If you operate as a contractor, you are responsible for verifying subcontractors and handling CIS deductions correctly. An accountant can manage this process for you and ensure full compliance.

They can:

  • Register you with HMRC as a CIS contractor.

  • Verify subcontractors using HMRC’s online system to check their tax deduction status.

  • Calculate deductions at the correct rate (20% for registered or 30% for unregistered subcontractors).

  • Record all transactions in your books, ensuring each payment and deduction is documented.

  • File monthly CIS returns to HMRC on time, avoiding penalties.

  • Issue payment statements to each subcontractor as proof of deductions.

By managing these tasks, your accountant ensures you meet your legal obligations and maintain a clean, organised record of all CIS activity.

How an Accountant Can Help Subcontractors

Subcontractors face a different challenge — ensuring their CIS deductions are recorded accurately and reclaiming overpaid tax at the end of the year. An accountant can:

  • Keep detailed records of all payments and deductions.

  • Collect CIS statements from contractors and reconcile them with your income.

  • Claim tax refunds when too much tax has been deducted.

  • Prepare and file your Self Assessment tax return to include all CIS income and expenses.

  • Advise on allowable expenses to reduce your tax bill, such as tools, mileage, and protective clothing.

Without accurate bookkeeping, it is easy to underclaim or overpay tax, so having an accountant manage your records helps ensure every deduction is accounted for correctly.

Managing CIS Payments and Records

An accountant can set up systems that simplify your CIS bookkeeping, whether you are a contractor or subcontractor. This includes:

  • Using CIS-compliant accounting software such as QuickBooks, Xero, or Sage.

  • Creating templates for invoices, payment statements, and deduction summaries.

  • Maintaining a clear audit trail in case HMRC requests a compliance check.

  • Reconciling bank statements and CIS records each month to ensure accuracy.

These systems help prevent errors and make it easier to provide accurate information during tax returns or audits.

Staying Compliant with HMRC

CIS compliance is essential to avoid fines and penalties. HMRC can issue penalties for:

  • Late or missing CIS returns.

  • Incorrect verification or deduction amounts.

  • Failing to provide subcontractor payment statements.

An accountant ensures your business stays compliant by submitting returns on time, checking deductions are correct, and keeping up with changes to CIS legislation. They also act as your representative in case HMRC raises any queries.

Helping You Save Time and Money

CIS bookkeeping can quickly become time-consuming, especially for contractors managing several subcontractors or subcontractors working across multiple projects.

An accountant saves you valuable time by handling:

  • Data entry and record keeping.

  • CIS return submissions.

  • Communication with HMRC.

  • Year-end reconciliations and tax filings.

They can also identify opportunities to reduce your tax liability, such as claiming allowable business expenses or structuring payments more efficiently.

Ensuring Accurate Tax Refunds

For subcontractors, one of the biggest benefits of good CIS bookkeeping is getting the right tax refund. Many subcontractors overpay tax throughout the year because deductions are made automatically by contractors.

When your accountant prepares your tax return, they use your CIS statements and expense records to calculate your true tax position. If you have overpaid, they claim the refund directly from HMRC, often resulting in a significant payout.

Example Scenario

Chris is a self-employed plasterer working under CIS. Each month, different contractors deduct 20% from his payments. By the end of the year, Chris has earned £45,000, but after deductions and expenses, his actual tax liability is much lower than the total tax withheld.

His accountant collects all CIS payment statements, records his expenses for tools, fuel, and insurance, and files his Self Assessment. HMRC refunds £2,500 in overpaid tax — money Chris might have missed out on without accurate bookkeeping.

Using Accounting Software

Accountants often use digital tools to make CIS bookkeeping more efficient. These systems can:

  • Automatically verify subcontractors with HMRC.

  • Generate monthly payment statements.

  • Record CIS deductions directly in the accounts.

  • Sync with bank transactions for accuracy.

This not only saves time but also reduces human error, ensuring your CIS records are always up to date and ready for HMRC reporting.

The Role of an Accountant Beyond Bookkeeping

An accountant does more than just record transactions — they help you make better business decisions. They can:

  • Provide advice on managing cash flow.

  • Help you decide whether to register as gross payment status (to avoid deductions).

  • Forecast future tax liabilities.

  • Offer guidance on growing your construction business.

Their ongoing advice can be invaluable, particularly if you plan to expand or hire additional subcontractors.

Conclusion

An accountant can play a vital role in helping contractors and subcontractors stay compliant and efficient under the Construction Industry Scheme. From verifying subcontractors and managing deductions to filing returns and claiming refunds, they take the stress out of CIS bookkeeping.

With their expertise and use of digital tools, accountants ensure your records are accurate, your tax position is optimised, and your business runs smoothly without unnecessary penalties or missed opportunities.