What Falls Under CIS?

What falls under CIS?

Sub-contractors that are subject to regulations that govern the Construction Industry Scheme can be a limited company, a partnership or indeed a sole trader in his own business. And the regulations say that CIS applies to all construction operations to buildings,  whether they be permanent or temporary, or to the land, whether it be permanent or temporary. So basically, every construction operation you can think of is covered by CIS.

There are, however, a number of exceptions to that and we often get asked about what falls under CIS, and what are the exceptions and there’s some really odd cases for that. The regulations say that all construction operations are covered by CIS, except the work of professionals. So, professionals are classified as architects, surveyors, consultants in building engineering and that type of operation. But of course, there’s always an anomaly with that; it stands unless those professionals are involved in the management of a site, for instance, if an architect is operating as a developer or indeed, if he is acting as a site supervisor, he will be caught by CIS. So with all those professional operations, if they are purely in a consultative role, they are outside of CIS. If they are providing management services within an operation, they may well be caught by CIS – unless you’re in the planning role as planning is always excluded from CIS.

Is CIS decided on a job-by-job basis, rather than a profession?

Pretty much. Yes, most architects, most surveyors will automatically be excluded from CIS unless they are, like I say, involved in managing that construction operation. Now, one of the other issues as well is that the regulations apply to all buildings and structures whether they be permanent or temporary, but there are exceptions along the temporary role as well: temporary structures that are exhibition stands, film or TV sets, theatre sets, marquees or the provision of portable offices are all considered to be outside of CIS. The anomaly, of course, is that if a portable office or building is being provided for a construction site, all of those portable buildings are considered to be part of what falls under CIS, because they are an integral part of the construction operation.

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How often do these CIS rules change? Is it an ever-changing landscape?

Not really, no, although they have been evolved over the decades by case laws. There are a number of circumstances where a tax tribunal has been heard, where a taxpayer thinks they should be outside of CIS and HMRC thinks they should be within CIS. Those regulations have been tested in court and these are now pretty much set in stone, or at least an accepted guideline. The complete list of all construction operations, both of what falls under CIS and what’s excluded, are in HMRC’s CIS Reform Manual, which is easy to find online. Frankly, if someone were to simply type into Google ‘CISR14330’, that will automatically bring up HMRC’S own guide to every construction operation, and what’s in and what’s out.

One of the other areas that I suspect has the most confusion within it, is building systems. Construction within a construction operation – if you’re providing new systems such as electrical systems, heat and vent, lifts, plumbing – all of the traditional building services; the provision or installation of those new services is automatically within CIS. However, the maintenance of those services is outside CIS. So when you build a new house, a new office block, the installation of all those new systems – including fire protection systems – all those parts of the arrangements are in CIS. There are some exceptions to that: for instance, close circuit TV is outside of CIS. But of the traditional building services; plumbing, electrics, heating, that sort of thing – all of the new systems fall under CIS, but maintenance, as I say, is outside.

Maintenance can even be a significant change, as indeed can an extension to a system. So if an electrical system is extended, or if a heating system has a new boiler, that is still only maintenance, it’s not the installation of a new system.

Again, one of the issues to consider with CIS is that if you’re, say, an electrical contractor and you are invoicing for both the installation of new systems and the maintenance of existing systems – because installation is involved, the whole of the labour element would have to be covered by CIS because it’s a mixed invoice. If they’re invoiced separately, the installation work would be subject to CIS on the labour and the maintenance work, under a separate invoice, would not be subject to CIS.

Where can you get advice about what falls in and out of the CIS scheme?

At EEBS, we discuss this with clients on a regular basis; 99% of the time, they’re very familiar with the regulations and what their obligations are but just occasionally, there’ll be an anomaly. One of our clients had recently branched into solar panels; solar panel systems are within CIS, but obviously that’s a fairly recent upgrade to the CIS regulations. The manual has been rewritten recently and that confirms that the installation of solar panels falls within CIS, but again, maintenance of those systems will be outside of CIS.

On the CIS homepage, they have a phone number for people to phone the construction industry helpline. Now, some of the responses can be confusing at best – I’ve got a lot of time for HMRC; they do some great work – but it can come down to the depth of knowledge of the advisors that you get put through to. They’ll be fully aware of the main aspects of CIS, but some emerging technologies like the installation of EV chargers, or smart home installation, they may well need to take advice on.

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Nick Pilgrim

M.D. | CIS Payroll Expert
01245 493832

Nick loves nothing more than chewing the fat over CIS payroll queries – actually that’s not strictly true; he likes playing golf and driving round Europe, but pick up the phone to him anyway!

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