Construction industry scheme

PGMPGM Font Of All KnowledgeRegistered Posts: 1,954
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...

Comments

  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    Yes, CIS is my speciality. What do you need to know?
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    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.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    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.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    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.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    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.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    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.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    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.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Thats great, many thanks TC!
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    TC could they register for gross status?
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Had a quick read on the gross status, that does seem a better option!
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