Construction Industry Scheme CIS

If you are in the construction industry you need to operate the Construction Industry Scheme CIS in respect of payments to your subcontractors. We can prepare all neccssary payslips and monthly returns.

You also need to comply with VAT regulations as applicable

Subcontractor includes any person, firm or company who does construction work for you who is not on PAYE with you. The definition of most construction work is fairly obvious but there are some grey areas. Talk to us if you are in doubt.
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.

The view of accountants and tax advisers seems to be that the proposed regulations are seeking to override an approximately 200 year history of case law which defines the status of employment against that of self employment.

See also Employment tax topics

Any company or business in construction becomes involved in a complex web of tax administration involving Corporation Tax or Income Tax, PAYE, National Insurance, CIS payments from customers, CIS payments to subcontractors, VAT and VAT choices plus, for companies, Companies House filings and administration. The situation can quickly run out of control.

Please contact us about compliance with CIS, tax and Companies House procedures.