If you’re a recruiter in the construction industry, you can help your agency stand out from the crowd by ensuring you protect your clients from compliance risk.

The first step is to understand the CIS compliance issues from your clients’ perspective, so you can clearly communicate all the measures you take to keep them safe.

In this article, we outline the main issues end hirers face, explain how they can be mitigated and address the key role your agency should play.

Introduction

The Construction Industry Scheme (CIS) is a set of rules established by HMRC for contractors and subcontractors in the construction industry.

While the CIS is designed to ensure tax adherence and streamline processes, it can present a risk for end hirers (contractors) who are relying on the recruitment agencies (and the payments partners they appoint) to keep them safe.

What risks do end hirers face?

One of the most significant risks is the potential tax liability. Under CIS, contractors must deduct money from a subcontractor’s payments and pass it to HMRC.

If a recruitment agency (or their payments partner) misclassifies workers or fails to deduct the appropriate tax, the end hirer could be held liable for any unpaid taxes.

This includes situations where the agency incorrectly categorises workers as self-employed when they should be treated as employees. The end hirer may face backdated tax bills, penalties, and interest.

Another key issue relates to compliance reporting. CIS compliance is complex and requires meticulous record-keeping and accurate reporting. Recruitment agencies must verify the CIS status of subcontractors and ensure the correct deductions are made, which is where a specialist CIS payments provider like Crest Plus comes in. Any failure in this process can result in non-compliance, for which the end hirer is ultimately responsible.

Compliance checks by HMRC can be extensive, and any discrepancies found can lead to significant fines and penalties. Additionally, HMRC investigations can cause costly operational delays or interruptions as well as reputational damage leading to cashflow issues and potential loss of future business.

Mitigating the Risks

Helping your clients to understand the risks associated CIS is the first step towards showing how your agency supports them to operate compliantly.

You should be able to demonstrate your CIS compliance processes and show you have a strong track record of adherence to HMRC regulations.

You should also support your clients to undertake regular audits to help identify potential issues early and ensure you can demonstrate continuous compliance. Audits should check the accuracy of tax deductions, the verification of subcontractor status, and the proper filing of returns.

Working in partnership with a specialist, compliant and FCSA-accredited payments partner like ourselves is a key part of this, of course. Because we provide timely and accurate records to all the recruitment agencies we support, this is not an onerous task if we are your payments partner.

In summary

While the CIS provides a structured framework for tax compliance in the construction industry, it introduces several risks for end hirers. Because of this, your compliance entailsials can be a key point of difference for your agency.

By taking your responsibilities seriously, you can show how you enable end hirers to mitigate potential issues and ensure compliance with CIS regulations.

We’ve specialised in CIS payments for more than 20 years, so have an unrivalled understanding of the issues and the streamlined service your business needs to succeed in construction recruitment. Appointing Crest Plus as your compliant payments partner is a key part of the process, of course!  We offer a CIS Healthcheck to agencies with compliance concerns, it’s designed to help you identify and address any issues.

If you are a recruitment agency looking for help with CIS, please speak to a member of our sales team 01923 257257.