Construction industry scheme

PGM

Does anyone know much about this?

I think we're in the grey area of needing to be in the scheme, but a customer insists we should be in it.

Maybe we should, I really don't know enough about it. And the Inland Revenue help sheets do many things but not help...

T.C.

Yes, CIS is my speciality. What do you need to know?

PGM

I work for a CIC (Community Interest Company), we don't pay tax because we gift aid any profits we make to the charity which owns us.

We have a building section, which does a decent amount of construction work.

From what I've read it seems we should be in the CIS scheme, but the wording of the documents I've read isn't plain English, so all a bit confusing.

T.C.

Yes, it sounds as though this would come under the Construction Industry Scheme.
This link might help.

http://www.hmrc.gov.uk/cis/intro/decide-if-cis.htm

A business can come under CIS even if that is not its main business. If building operations are carried out (and building operations are wide-ranging accordingly to HMRC), then CIS comes into play.

PGM

Thanks TC, that'll be a fun new job!

So, companies will deduct tax before paying us, I assume we'll be able to reclaim that money? Or is that the tax that we would have paid through PAYE?

T.C.

Yes. Firstly you need to register your business under CIS as a sub-contractor - I think you can still do this over the phone. Then your business will need to provide a UTR number to the contractor who will then verify that you are registered and what percentage is to be deducted - 20% or 30%. Every time they pay you, or at least every month, they will then supply you with a Payment Statement detailing their name, address, PAYE ref etc and your details, as well as the gross amount of that which has been deducted. Don't forget you will have to invoice them with the materials and labour as separate figures as the labour is the only part which is to have tax deducted. At the end of the year this can be claimed back, as tax paid at source. Hope that brief explanation helps.

PGM

Ah thats great TC, clears things up a lot, thank you.

Quick question; if we bill a supplier now for materials only, can this be done outside of the CIS scheme?

T.C.

mmm....awkward one. I would say officially no, but then as there is no tax to deduct I would get that done out of the way, but register asap for any future payments.

PGM

Thats great, many thanks TC!

Gem7321

TC could they register for gross status?

PGM

Had a quick read on the gross status, that does seem a better option!