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Overseas Construction Industry
Clients
Companies from continental Europe are frequently
attracted to the UK market where they can enjoy competitive advantages.
Despite talk of tax harmonisation however,
this can prove to be a veritable minefield. The following areas can easily be
over-looked at considerable subsequent cost.
Construction Industry Scheme
(“CIS”)
In order to prevent a black economy in this
industry the UK government has intro-duced complex rules requiring contractors
and subcontractors to be registered under the CIS Scheme. In the absence of
such registration they cannot receive any payment for their services in the UK.
Alternative registration methods permit either payment in full or after
deduction of an 18 % withholding tax.
Construction Industry businesses coming to
the UK should therefore seek appropriate CIS registration as early as possible.
Moreover if subcontractors are to be retained by such businesses the CIS rules
must also be applied to any payments made to such subcontractors and
withholding tax may need to be retained and forwarded to the Inland Revenue
under a Pay as You Earn Scheme (“PAYE”).
Taxation of Employees
Construction industry businesses working in the UK may have
their own employees working here. Under certain circumstances such employees
may be subject to UK Taxation. The overseas business may also have an
obligation to operate a “Pay as You Earn Scheme” (“PAYE”)
by which taxation must be deducted from wages at source. Overseas businesses
can frequently be unaware of such obligations.
Value Added Tax
(“VAT”)
There can be advantages in obtaining
voluntary registration for VAT as this enables input tax to be reclaimed. In
certain circumstances VAT registration may be obligatory.
Corporation Tax
A place of business for taxation purposes can easily arise even
without registration of a limited company or formal branch operation. Where
there is a place of business in the UK corporation tax is consequently payable
in the UK and corporation tax registration and annual tax returns will
therefore be required.
Blick Rothenberg and Bral are able to offer
a comprehensive service to enable overseas companies engaged in the
construction industry to comply with all of the relevant rules and regulations.
We can help from initial advice and set-up to regular submission of returns and
payments.
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