What is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a set of special rules for handling payments made by contractors to subcontractors for construction work. If your business works in the construction industry or does construction related work then it may need to register with HM Revenue & Customs (HMRC) as either a contractor or a subcontractor under CIS.
Certain other businesses and organisations may need to register with HMRC as contractors if they spend more than a certain amount each year on ‘construction operations’ covered by the scheme. They may have to do this even if their main activity is nothing to do with construction.
What types of work or businesses are covered under CIS?
CIS can apply to all types of businesses that work in the construction industry in the UK. These include:
- self-employed individuals working as sole traders
- partnerships
- companies
- limited liability partnerships (LLPs)
As well as traditional construction businesses like builders, the scheme can also apply to businesses like:
- labour agencies and staff bureaux
- gangmasters – or gang leaders
- property developers
Even if your business or organisation doesn’t do building work, it might still be a mainstream contractor or HMRC may treat it as a ‘deemed contractor’ – and require it to register with CIS – if it spends more than an average of £1 million a year on construction operations over a three year period. The types of businesses and organisations that this could apply to include:
- some large businesses
- housing associations
- other ‘arms length’ management organisations (ALMOs)
- local authorities
- government departments
- other public bodies
If your business is based outside the UK, the CIS still applies if it does work in the UK – or UK territorial waters – that is covered by the scheme. If you’re based outside the UK and you plan to carry out construction work that’s covered by the scheme, you’ll need to register with the CIS.
RKG Consulting can help you to register under CIS and we can assist with compliance services such as preparing the returns required under the scheme, filing these with HMRC and ensuring you are fully compliant with the law.