Advice to relieve the compliance burden of CIS for building contractors
Construction Industry Scheme
What is the Construction Industry Scheme?
The Construction Industry Scheme is a tax deduction scheme which sets out the rules for how payments by contractors to subcontractors for construction work must be handled in the construction industry.
Non-compliance with CIS can lead to financial penalties and, in some circumstances, prosecution.
Blick Rothenberg will relieve the burden of compliance with this scheme for both contractors and sub contractors through our outsourced CIS service, providing you with the guidance and services necessary to avoid potential penalties, so you can concentrate on what you do best.
Who does CIS apply to?
If you are a property developer or builder or a business not in the construction industry but have spent on average £1m or more on construction over the last three years, you are considered a contractor under the CIS.
This may also be true for some public bodies if they have had an average annual spend of £1m or more on construction operations over three years.
When does CIS apply?
The CIS regime applies to all payments made under a construction contract, which is a contract relating to construction operations that is not an employment contract.
Under the scheme, a contractor is regarded as a business who instructs another business (a subcontractor) to carry out construction work for them.
The scheme covers most construction work relating to buildings and plant, including site preparation, decorating and refurbishment.
What are your obligations?
All payments made from a contractor to a subcontractor for construction work must take account of the subcontractor’s tax status as determined by HM Revenue & Customs (HMRC).
This may require you to make deductions which are then paid to HMRC.
The deduction rates for the scheme are 20% for subcontractors registered with HMRC for payment under deduction and 30% for those not registered.
Subcontractors who meet certain conditions imposed by HMRC are able to receive payments without deduction of tax.
How we can help
Understanding your obligations as a contractor or sub contractor under CIS can be complicated and is subject to a number of conditions.
Drawing on the expertise of our expert CIS advisers, we will remove the CIS compliance burden, by advising you on:
- Whether your business needs to register for the scheme
- Registration with the tax authorities
- Verification of new subcontractors
- Calculation and processing of monthly deductions from amounts payable to subcontractors
- Payment to subcontractors gross or net of tax at 20% or 30%
- Completion and delivery of monthly statement of deduction to subcontractors
- Completion of monthly return to the tax authorities
- Whether your subcontractor can be considered self-employed or not