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Taxguide 01/18: The construction industry scheme: a practical guide

In TAXguide 01/18 Howard Royse provides an overview of the construction industry and explains the verification process and what gross payment status means. Read a summary here, Tax Faculty members can download the full guide.

TAXguide 01/18

Tax faculty members can download this guidance in full

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Overview

The construction industry scheme (CIS) is, as the name suggests, an industry-specific tool used by HM Revenue & Customs (HMRC) to maintain high levels of tax compliance within that industry and to ensure the collection of tax in respect of self-employed workers.

CIS is not a tax. The deductions made from subcontractors are redeemed against other taxes due, with any surplus repaid.

Because of the nature of the industry, a high proportion of workers – something like 40 – are self-employed. It needs to be understood that there is no such thing as a typical construction project; they are all unique, and contractors need to be able to engage and disengage workers depending on the size, location, longevity and nature of the work.

It was because of the tax lost from self-employed workers that CIS was introduced in 1972. It has remained in place ever since, with amendments in 1975, 1999 and most recently 2007. It is this current incarnation to which this guide refers, including the closure of certain communication methods following the 2014 review.