There are two types of CIS registrations for subcontractors:
- A “paid under deduction” registration where the contractor will deduct 20% tax from payments made
- A “paid gross” registration where payments made by the contractor are gross
Where a subcontractor is not registered for CIS, the contractor will deduct 30% tax. This means it is essential to ensure a subcontractor CIS registration is in place as soon as possible.
The good news is that overseas companies are generally able to obtain a “paid gross” registration status. However, you need to act quickly because HMRC applications take 6-8 weeks to process and you may be paid under deduction in the meantime. Don’t worry if this happens – we can recover any deducted tax from HMRC on your behalf.