The problem
A developer who pays subcontractors for construction work is a CIS contractor and must file a return by the 19th of every month. Working out deductions in a spreadsheet, writing statements and filing on HMRC's site takes about 3 hours a month for 10 subcontractor payments, and a return even 1 day late costs $133£100€119A$192C$188.
What the AI does
Xero's CIS page says it checks that a subcontractor is signed up to the scheme, works out the deduction at 20%, 30% or 0% when you enter their bill, emails CIS statements to all subcontractors at once and files the return to HMRC from inside Xero. All plans include the calculations and reports; verifying, filing and bulk statements are a $7£5€6A$10C$9 a month add-on. The 19th lives first in your own diary with a named person responsible; Xero is where the work is done, not the reminder you rely on.
A worked example
A developer-refurbisher in Birmingham pays about 10 subcontractors a month across 2 sites and works out CIS deductions in a spreadsheet. They move to Xero Grow with the CIS add-on, and the bookkeeper files by the 12th of each month with the owner checking.
Before
About 3 hours a month working out deductions, writing statements and filing
After
About 1 hour a month checking Xero's figures, filing and sending statements
What it's worth
About $106£80€95A$154C$150 a month saved, against a $59£44€52A$84C$83 cost. That is 2 hours a month valued at $53£40€48A$77C$75 an hour. Grow is $52£39€46A$75C$73 a month plus VAT and the CIS add-on $7£5€6A$10C$9 plus VAT, $59£44€52A$84C$83 ($70£53€63A$102C$100 with VAT); if you already use Xero, only the $7£5€6A$10C$9 is extra. Avoiding a $133£100€119A$192C$188 late-filing penalty isn't counted.
How to set it up
- Put the 19th of every month in your main diary as the CIS deadline, with a reminder on the 12th, and name who files and who checks. That diary is the primary record.
- Turn on CIS in Xero, add the $7£5€6A$10C$9 a month filing add-on and connect it to HMRC.
- Add each subcontractor and verify them, so Xero applies the right deduction rate.
- Enter each subcontractor bill with labor and materials shown separately, and check the deduction against the invoice.
- By the 12th, review the return, file it, keep HMRC's confirmation and email each subcontractor their statement.
What goes wrong
- Reminders and connections can fail silently. The diary entry, the named person and a check of HMRC's confirmation each month are the control, not the software.
- A late return costs $133£100€119A$192C$188 even 1 day late and $266£200€238A$384C$376 at 2 months; check what to file in a month with no payments on GOV.UK.
- Ignite ($24£18€21A$35C$34) is limited to 10 bills a month, so a developer paying 10 or more subcontractors plus suppliers needs Grow.
- The deduction is only as right as the bill you enter. Check that materials have been separated from labor on each invoice.