CIS Contractors

Who needs to be registered as a CIS Contractor?

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You must be registered as a Construction Industry Scheme (CIS) contractor if:

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• You pay subcontractors to do construction work

• Your business does not do construction work but you usually spend more than £1 million a year on construction

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The definition of construction is very wide including decorating, repairs, and demolition for example. All business to business payments for work done are covered by CIS: only payments made by private householders are not under CIS.

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So for example, if you complete some work for a private householder, the money paid to you by the householder is not subject to CIS tax deduction. But if you ask a self-employed colleague to help, then any payments you make to the colleague are subject to CIS. Notice that if the householder pays both workers directly, then CIS would not apply.

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HMRC regulations that MUST be followed when you are a CIS contractor:

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• Register for CIS before you take on your first subcontractor

• Check if you should employ the person instead of subcontracting the work. Penalties can be incurred if the person should be an employee instead

• Verify your subcontractors with HMRC (checking they are registered as a CIS subcontractor)

• When you pay subcontractors, you’ll usually need to make deductions from their payments and pay the money to HMRC

• File monthly returns and keep full CIS payment records