CIS Services for Overseas Businesses working on UK Construction and Civil Engineering Projects
At Türner & Co, we specialise in providing CIS (Construction Industry Scheme) advisory and compliance services to multinational businesses of all sizes undertaking construction projects in the UK. Crucially, CIS applies to all businesses, including partnerships and sole traders, that undertake construction work in the UK. There is no exemption for businesses that are based outside the UK.
The importance of understanding the scope of CIS
Determining whether your activities are within the scope of CIS is vital.
For contractors using subcontractors, CIS imposes specific compliance obligations on them. Failure to comply can lead to penalties and, if CIS deductions are not made from subcontractors when required, the contractor might have to bear these costs, turning them into a real expense for the business. Please refer to our CIS Compliance page for more information.
For subcontractors working on UK construction projects, suffering CIS deductions of 30% from payments due represents a significant cost. Registering as a CIS Subcontractor on a timely basis can avoid this. CIS considerations should be integrated early into subcontractor negotiations. This means it is vital that your procurement and commercial teams fully understand the financial impact of achieving CIS compliance from the outset.
What Falls Within the Scope of CIS?
CIS covers construction operations in the UK, including most civil engineering work. The UK includes UK territorial waters up to the 12-mile limit.
Hire of Machinery
Hiring plant and machinery without an operator falls outside CIS, whereas hiring with an operator is within CIS.
Materials Costs in CIS Deduction
UK guidance states that material costs can only be excluded from CIS deduction calculations if itemised on the invoice and charged at cost. Any mark-up must be clearly itemised.
Mixed Contracts
Contracts including activities that are both within and outside the scope of CIS are treated as falling entirely within CIS. Invoice splitting for different activities is not permissible.
Addressing CIS Challenges
Correct Deduction Calculations
It is the responsibility of the CIS Contractor to accurately calculate and make CIS deductions, including properly accounting for materials.
Disputes Over CIS Deductions
Subcontractors can dispute deductions with their contractor and in certain circumstances if they believe their services fall outside of CIS.
Recovering CIS Deductions
Subcontractors must act quickly to register as a CIS Subcontractor in order to recover CIS deductions from the UK tax authorities – HM Revenue & Customs (HMRC).
FAQs
You can challenge the deduction by discussing it directly with the contractor or by contacting HMRC. However, it is ultimately the CIS Contractor’s responsibility to operate CIS correctly.
It may not always be obvious if your customer is a CIS Contractor. For example, a ‘deemed Contractor’ is a business not primarily engaged in construction, but which spends a certain amount on construction operations (currently more than GBP 3 million on construction in the previous 12 months), thus falling under CIS. These rules require businesses to monitor construction spend in the UK.
An ‘end user’ for DRC is a VAT-registered customer who consumes the services supplied and is responsible for accounting the VAT to HMRC.
Our CIS Advisory Services
Determining the scope of CIS
We assist in identifying whether your activities fall within CIS.
Compliance Management
Our team ensures you meet all CIS obligations – either as a CIS Contractor or CIS Subcontractor.
Support for Disputes and Recovery
Guidance on resolving disputes over CIS deductions and recovering CIS deductions from the UK tax authorities.
Communication with Teams
We can support you with training your procurement, finance and project teams on CIS implications to prevent costly mistakes.
Contact Our Experts
For expert CIS advisory services, ensuring your compliance in the UK construction sector, Contact Türner & Co today. Our expertise will guide you through the complexities of CIS, safeguarding your business from potential pitfalls.
Kate McDermott
Director
Head of Indirect Tax & HR
Martin Briggs
Senior Manager
Accounting & CIS
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