Construction Industry (CIS)
If you are in the construction industry you need to operate the Construction Industry Scheme (CIS) in respect of payments to your subcontractors.
Subcontractor includes any person, firm or company who does work for you who is not on PAYE with you. There are monthly returns for CIS which give rise to monthly late filing penalties. If you have both PAYE and Construction Industry Schemes there is also an annual late filing penalty for PAYE.
In July 2009 The Government published "False self-employment in construction: taxation of workers". This consultation outlines the Government’s proposal for addressing the "problem". Even workers registered in the construction industry system (CIS) will be deemed to be on PAYE unless they meet one or more of the following criteria:
1. Provision of plant and equipment – that a person provides the plant and equipment required for the job they have been engaged to carry out. This will exclude the tools
of the trade which it is normal and traditional in the industry for individuals to
provide for themselves to do their job;
2. Provision of all materials – that a person provides all materials required to complete a
job; or
3. Provision of other workers – that a person provides other workers to carry out
operations under the contract and is responsible for paying them.
The Government believes that these criteria bear the hallmarks of a person genuinely carrying on a business on his own account ... under these proposals all others will be deemed to be on PAYE.
In March 2010 The Government published the results of the consultation. The approach seems, broadly, to be that they intend to bring in the measures, as envisaged, when the construction industry has recovered from the recession.
