What Falls Under CIS?

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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