defines both and gives an extensive list<\/a> of those persons who are treated as contractors for its operation.\u00a0 If CIS is relevant, then the contractor has an obligation to verify the status of the sub-contractor and apply the relevant regulations to payments made to them.\u00a0 It is the impact of payments which is particularly important to understand.\u00a0 This is due to the cashflow impact for the sub-contractor.<\/p>\nIf the sub-contractor is not registered with CIS then the contractor must deduct tax at 30% from payments to the sub-contractor.\u00a0 If the sub-contractor is registered then the deductions falls to 20% unless the sub-contractor is registered as a gross status party in which case no deduction is required.\u00a0 The deduction is against the VAT exclusive payment and does not apply to the cost of materials of the sub-contractor.\u00a0 If the sub-contractor does not confirm their cost of materials then the contractor should make a reasonable estimate.<\/p>\n
There are regulations which define how the contractor must verify the status of the sub-contractor and the frequency of CIS Returns.\u00a0 All of these administrative tasks must be done online.<\/p>\n
If the sub-contractor is a company then tax deducted from payments received by it can be offset against its own PAYE and \u00a0National Insurance Contributions, deductions under CIS from payments made to its own sub-contractors and Corporation Tax on its profits.\u00a0 If the sub-contractor is not a company then tax deducted is offset against its Income Tax liability and National Insurance Contributions.\u00a0 The sub-contractor who is not a company will therefore claim relief for deductions at a later time than a corporate sub-contractor.<\/p>\n
Registering for Gross Status<\/h2>\n
There are obvious advantages to registering for gross status and there are conditions which must be satisfied before gross status can be attained.\u00a0 These include the method of operating in the UK, turnover thresholds, group structure and demonstrating a good compliance history with HMRC.\u00a0 If the compliance history is damaged during construction operations then HMRC can revoke gross status which may have a catastrophic impact on cashflow.\u00a0 Maintaining a good compliance history with HMRC is therefore paramount.<\/p>\n
How we can help<\/h3>\n
We have considerable experience of CIS matters including split contracts, definitions of contractors and sub-contractors, the practical impact of professionals providing project management services and preventing loss of gross status.\u00a0 All of these ensure that the cashflow impact of CIS is minimised.<\/p>\n","protected":false},"excerpt":{"rendered":"
The objective behind CIS The current iteration of the Construction Industry Scheme (CIS) came into effect on 6 April 2007 but it has been refined in the years since its introduction.\u00a0 \u00a0All permutations have been created to try and overcome the belief that many payments in the construction industry were not reported for tax purposes.\u00a0[…] <\/p>\n
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