What is Construction Industry Scheme (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. The Construction Industry Scheme sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry and certain other businesses. Under the Scheme, all payments made from contractors to subcontractors must take account of the subcontractors tax status as determined by HM Revenue & Customs. This may require the contractor to make a deduction, which they then pay to HM Revenue & Customs, from that part of the payment that does not represent the cost of materials incurred by the subcontractor. As of 6 April 2007 a New Construction Industry Scheme started. Its aims are: • to reduce the regulatory burden of the Scheme o
