New dawn for construction industry but have you registered for the CIS?

British construction activity grew at the fastest pace since September 2007 in August, the latest Markit/CIPS Construction PMI has revealed. This is undoubtedly good news for the UK economy and construction industry and we take this opportunity to remind all contractors and subcontractors of their responsibilities when it comes to the Construction Industry Scheme.

What is the Construction Industry Scheme?

The Construction Industry Scheme (CIS) was introduced in 1971 and governs the way that payments to subcontractors in the construction industry are made. The CIS applies to self-employed individuals working as sole traders, partnerships, companies and limited liability partnerships (LLPs) that work in the construction industry.

Important note: Even if your business doesn’t do building work it might be considered a mainstream contractor or ‘deemed contractor’ if it spends more than an average of £1 million a year on construction operations over a three year period.

What is classed as a construction operation?

The scheme includes almost all work done to permanent buildings, temporary structures and civil engineering work or installations, such as:

  • Repairs and refurbishment
  • Alterations and extensions
  • Decorating
  • Demolition

What are your responsibilities?

Subcontractors

If you work as a subcontractor in the construction industry you must register with HMRC before you start working. If you don’t register, contractors will have to make a deduction from your payments at the higher rate of 30 per cent as opposed to the standard rate of 20 per cent.

You may be eligible for ‘gross payment’ status, but to decide that you will first need to register and pass qualifying tests.

Contractors

As a contractor you will need to register with HMRC and follow certain rules to ensure that you pay your subcontractors within the scheme correctly.

At Taylor Edward we have experts with high levels of experience of the construction industry and building profitsContact us today to find out how we can help you to avoid penalties and remain compliant