The Construction Industry Scheme (CIS) is a long-established tax compliance scheme that involves additional compliance burdens and reporting obligations for certain businesses. CIS rarely involves an extra tax burden, it is mostly designed for HMRC to collect payments on account of tax throughout the tax year rather than at tax year-end, with transparency through monthly returns, similar to the way in which the PAYE system operates.
It is widely known that CIS applies to all businesses in the construction sector, such as building firms, property developers and demolition companies. However, CIS can apply to any business spending significant sums on ‘construction operations’ (broadly covering all types of construction and de-construction work), such as hotel groups, property investors, public bodies, manufacturers and utility companies.
Regardless of whether a business is required to operate CIS as a traditional construction company or as a ‘deemed contractor’ due to the scale of relevant expenditure, CIS is a complex area of tax law and is an area of HMRC scrutiny with strict and significant penalties being applied for non-compliance even where the Exchequer has not suffered any loss of tax revenue.
Armstrong Watson’s Employment Tax team is highly experienced in supporting clients with all things CIS-related, including negotiating with HMRC when there is a problem. Typical areas we can help businesses with CIS include:
- Understanding the registration requirements for CIS and managing registration submissions to HMRC, including gross payment status applications
- Tax technical advice in establishing if certain work or contracts fall within CIS
- Advice and assistance in implementing robust CIS processes, e.g. in relation to subcontractor verifications, payments and monthly returns
- Provision of staff training
- Assistance with HMRC enquiries, penalty notices, or withdrawal of gross payment status
- Advice on the interaction between CIS and other tax areas such as off-payroll worker rules
For all CIS-related enquiries or support, please contact Brian Rudkin
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