CIS covers all ‘construction’ work, including work related to the construction and fitting out of buildings but also work such as decoration, repairs, site preparation demolition and all related work. Both those making payments and those receiving payments will need to register. All business-to-business payments are covered.
Here are some examples:
Adrian Is a self-employed electrician. He works with John Jones a self-employed builder, and rewires a factory building for him. Adrian’s work on this contract is covered by the Construction Industry Scheme.
Alex is a self-employed electrician. He rewires Fred Smith’s house. Fred is a private householder who pays Alex for the work directly. Alex’s work is not covered by the construction industry’s scheme.
Adam is a self-employed electrician, he rewires Mark’s house. To do so he works with Abigail, another self-employed electrician, on the project. Adam is the one who invoices Mark, but he shares the money with Abigail. For tax purposes, this relationship can be that of contractor and subcontractor. This is true whether the customer is a private householder or a main contractor but in this case, although Adam and Abigail are contractors or subcontractors, the construction industry scheme won’t apply if Mark is a private householder.
If you are a contractor
If you are a CIS contractor you will need to register under CIS as someone making payments. You will need to do this, even if you are already registered as a subcontractor. You may need to withhold tax from the money you pay your co-worker. In this situation, any tax withheld will be set off against your own personal tax liability.
