What is CIS?
Businesses operating in the construction industry are known as contractors and subcontractors and they may be companies, partnerships or self-employed individuals. Contractors pay subcontractors for construction operations and subcontractors are those businesses that carry out building work for contractors. Before they can get paid under the Scheme, subcontractors must hold either a Registration Card or a Subcontractors Tax Certificate. To get a Subcontractors Tax Certificate or Registration Card a subcontractor must first be registered with the Inland Revenue. Subcontractors who meet certain qualifying conditions will be issued by the Inland Revenue with Subcontractors Tax Certificates. Those who do not will be issued with Registration Cards. Where a subcontractor holds a Registration Card, the contractor must make a deduction from all payments for labour of an amount on account of the subcontractor's tax and National Insurance contribution (NIC) liability. Where the subcontractor holds a Subcontractors Tax Certificate, the contractor will pay him or her gross, that is, with no amounts taken off.
Who is affected?
Most 'contractors' and 'subcontractors' in the construction industry are affected, but these terms go much wider than the meanings they normally have. Contractors include not just construction companies and building firms but also Government Departments, Schools and local authorities, and many businesses normally known in the industry as 'clients'.
Who is not affected?
Private householders, and non-construction related businesses spending less than £1 million a year on construction work are not contractors and are not covered by the Scheme.
More information
More information on the Construction Industry Scheme generally can be obtained from Inland Revenue leaflet IR14/15(CIS). You may download a copy of the leaflet from this web site or you can obtain a copy from any HMRC office or the CIS Orderline on 0845 300 0551.
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