In the last 12 months new tax measures to crack down on tackling labour fraud and the VAT domestic reverse charge for building and construction services have been announced which affect the Construction Industry Scheme.

construction industry safety hats

What is the Construction Industry Scheme?

The Construction Industry Scheme (CIS) sets out rules for how payments to subcontractors for construction work must be handled by contractors in the industry, taking into account the subcontractor’s tax status as determined by HMRC.

This may require the contractor to make a deduction, which they then pay to HMRC, from that part of the payment that does not represent the cost of materials incurred by the subcontractor.

Who does the CIS Effect?

The CIS covers all construction work carried out in the UK, including site preparation, alterations, dismantling, construction, repairs, decorating, and demolition.

Any type of domestic or overseas construction business – companies, partnerships, and sole traders – working in the UK must register for the CIS, regardless of whether they’re a contractor or subcontractor.

Find out more in our CIS Active Practice Update

Our December Active Practice Update provides detailed guidance on the CIS, the new tax measures that came into force in 2021/22 to crack down on tackling labour fraud and the VAT domestic reverse charge for building and construction services which took effect on 1 March 2021.

If you would like to discuss in more detail any of the issues raised in this article with a member of our team, please call 01772 741200