Is your organisation subject to the Construction Industry Scheme?

POSTED: 4th January 2013
IN: Industry news

It is important for organisations working in, or partially involved in, the construction sector to ensure they are registered with the Construction Industry Scheme (CIS) from HM Revenue & Customs (HMRC).

undefinedThis marks a set of rules for how payments to contractors and subcontractors for construction work should be handled and can apply to businesses that invest an average of £1 million a year on construction projects over a three year period.

CIS can apply to all types of companies operating in the UK including self-employed individuals working as sole traders, partnerships and limited liability partnerships.

It is not just traditional construction firms that are subject to CIS, as property developers and labour agencies, among others, may also need to register with the scheme.

The scheme generally applies to permanent building, temporary structure and civil engineering work or installation and can cover a number of jobs like site preparation, repairs and refurbishment and dismantling work.

Construction, under HMRC's definition, is not limited to building and can also be applied to making things, putting things together and assembling items, so if that sounds familiar, check the CIS340 booklet for details.

As the tax office points out, certain work may not usually be considered construction, but depending on the circumstances, may still fall under CIS, such as tree planting if it is part of estate management or forestry work.

If your business confirms a contract that involves some construction operations then HMRC will treat the entire deal as a contract that comes under CIS, even if the different tasks are on separate invoices. 

The CIS rule does not apply to businesses which do not include construction operations and spend less than £1 million a year on building projects, including property investment companies.

However, companies may be subject to CIS if they pay for construction of a property that is let commercially to others, up for sale or let, or held as an investment, so it is vital you check out your business' standing if any of these factors sound relevant.

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