CIS- Part 1 - An Introduction

Latest scheme

The latest scheme has done away with cards and vouchers and HM Revenue & Customs have placed the responsibility for determining the status of the worker squarely on the contractor.

Sub-contractors new to the scheme need to register with HM Revenue & Customs.

Contractors must make a return every month showing the payments made to sub- contractors and NIL returns must be made where there are no payments in any month.

There is a penalty for failure to comply.

Contractors must complete the new monthly declaration saying that they have reviewed the individual employment status of each subcontractor!!

Monies can be paid in full or after deducting tax at 20% or 30%.

There is no requirement to submit an annual return.

HM Revenue & Customs will tell the contractor the applicable rate. The maximum penalty for not deducting tax when it should have been is 100% of the tax that should have been paid over.

Deemed contractors

Certain trades and bodies who are not normally considered to be contractors are brought within the scheme if they carry on a business and their average expenditure on construction operations in the three years ending with the last period of account is in excess of £1,000,000.

The other bodies brought within the scheme are:-
 Labour agencies
 Staff bureaus
 Gang masters and gang leaders
 Property developers
 Housing associations
 Local authorities
 Government departments
 Public bodies

The scheme covers all construction work to include inter alia:-
 Site preparation
 Alterations
 Dismantling
 Construction
 Repairs
 Decorating
 Demolition

To follow CIS-Part 2 - Sub-contractors