The week before the fifth
Your accounts team pays subcontractors through the month off approved applications. As the return deadline gets close, someone goes back through every payment: was this firm verified, what rate applies, how much of the payment was materials, did anyone send the deduction statement? A new subbie was paid gross because the rate in the system was left at the default. Another firm changed its trading name and the verification reference no longer matches.
None of this is hard work, but it is fiddly, it repeats every month, and it lands on the same person who is closing the month's accounts.
Why it keeps being manual
The information CIS needs is split across people. The QS knows the labour and materials split because it is on the application. The accounts system knows the payment. The verification result sits in an HMRC online session or an email from whoever did it. Each month someone stitches them together.
- Verification is done when a firm is set up, and not revisited when details change.
- The materials element of each payment is typed from the QS's notes.
- Deduction rates are held in the accounts system without the reference that supports them.
- Statements to subcontractors are produced separately and sometimes late.
- Subcontractors query their statements by phone, so the team looks everything up again.
What the monthly scramble costs
The obvious risk is getting a rate or a split wrong, which your accountant then has to correct. The day-to-day cost is time: every month the same checks, the same queries from subcontractors who cannot reconcile their statement, and the same pressure at the deadline. Your accountant or adviser decides how CIS applies to your business; we make sure the numbers they rely on are joined up.
How we join CIS to your payments
- Each subcontractor record holds its verified status, rate and verification reference, with the date it was checked.
- New firms, and firms whose name or details change, are flagged for verification before their first payment. Where your accounts or payroll software supports online verification, we use it; otherwise the result is recorded against the firm.
- When a payment is approved, the labour and materials split is taken from the approved application rather than retyped.
- The deduction is calculated at the recorded rate and shown to the person approving the payment.
- Payments are posted to your accounts system, such as Sage or Xero, with the deduction coded correctly.
- At month end, a draft return and each subcontractor's statement are prepared for your accounts team to check. Statements are sent by email once approved.
- Queries from subcontractors are answered from the same record, with every payment and deduction listed.
| Monthly step | Now | With the CIS layer |
|---|---|---|
| Check verification | Search emails and old sessions | Status and reference on each firm |
| Split labour and materials | Retyped from QS notes | Taken from the approved application |
| Apply rate | Default in accounts system | Recorded rate shown at approval |
| Statements | Built by hand | Drafted, checked, sent |
| Return figures | Totalled in a spreadsheet | Draft ready for review |
Submission stays with your accounts team or accountant. We prepare and check; a person signs off.
Month end without the hunt
Verification happens when it should, before the first payment, not when the return is due. The split comes from the document it belongs to. Statements go out on time and subcontractors can see how each deduction was worked out, so fewer of them phone. The return becomes a review of figures that already agree, rather than a day of assembling them.
It also gives you a clean trail if anyone asks later. Each deduction links back to the payment, the application it came from, the rate recorded at the time and the verification behind that rate. When a subcontractor disputes a figure, or your accountant wants to see how a month was built, the answer is on one screen instead of in three systems and somebody's memory.
Is CIS eating your month end?
- Someone rebuilds CIS figures from payments at the deadline.
- The materials element is typed in by hand.
- You have paid a firm at the wrong rate and found it later.
- Deduction statements go out late or on request.
- Subcontractors phone to query their statements.