I have written this post to clarify some of the common questions that have been brought to my attention while working with contractors and subcontractors within the UK construction industry.
In some cases, it can get a bit confusing as to what operations or under what circumstances certain works are within or can be pulled into the Construction Industry Scheme. As the main contractor, you should be mindful of these to avoid the possibility of non-compliance and penalties.
We will discuss a few common examples to watch out for.
Architects, Surveyors, and Other Professionals
If they are acting solely in a consultative capacity, their work will not fall under CIS.
If part of their work involves project management or supervision at the construction site, then they will be pulled into CIS.
See HMRC link for more information – CISR14270 – The Scheme: construction operations: professional work
Carpet Laying and Other Floor Coverings
Most floor covering installations such as tiling, vinyl, laminate, and timber flooring fall under CIS.
Carpet laying is an interesting one, which falls outside the scope of CIS. Even if a contractor organises the carpet and installation as part of the build contract, it is still deemed to be outside of CIS. An exception to this rule is if the subcontractor who is installing the carpet is also installing vinyl or another type of flooring as part of the same contract (mixed contract) – in this case, the carpet installation is then pulled into CIS.
See HMRC link for more information – CISR14170 – The Scheme: construction operations: floor coverings (for example, carpets)
Cleaning
Cleaning does not normally fall within CIS but can be pulled into the scheme as in the example below.
You are the main contractor carrying out some construction work for a client – it could be a loft conversion, renovation, or other. If you engage a cleaner to clean the inside of the building as part of your contract with the client, then the cleaning work is caught by CIS. This then raises a couple of things you need to be mindful off.
- The cleaner is a subcontractor to you and, as such, needs to be registered as a subcontractor in the Construction Industry Scheme. Many cleaners are not registered and do not realise they are required to be in the cases where they are working for contractors within the Construction Industry Scheme.
- You will need to verify that they are registered as a subcontractor for CIS. You will also need to apply the correct CIS deductions when paying them.
See HMRC link for more information – CISR14110 – The Scheme: construction operations: cleaning
Fire Alarms
Fire alarm and detection systems that provide an audible warning only, fall outside of CIS. This can include smoke or heat detectors or manually triggered alarm systems.
On the other hand, fire protection systems that include structural protection systems are caught by CIS. These systems could include components such as water sprinklers, fire curtains, or smoke extraction systems etc.
See HMRC link for more information – CISR14160 – The Scheme: construction operations: fire protection systems
Landscaping
Routine landscaping, gardening, and tree surgery are normally outside the scope of CIS.
Landscaping work that is caught by CIS includes: The surroundings of a house as a finishing operation in a larger construction project. Landscaping after demolishing buildings or structures. Constructing walls, driveways, patios, and similar features as part of routine landscaping as works forming part of the land. Tree-felling for site clearance, and turf laying as part of a broader construction project.
See HMRC link for more information – CISR14200 – The Scheme: construction operations: landscaping
Scaffolding
If there is no labour element involved, the hiring of scaffolding falls outside the scope of CIS.
Take note that in the majority of cases within the construction industry, a contractor will engage a subcontractor to supply (for rental) and erect the scaffolding. As there is an element of labour involved, this would be caught by CIS.
See HMRC link for more information – What you must do as a Construction Industry Scheme (CIS) contractor
Security Systems
The following security systems fall outside the scope of CIS: The installation of security systems, including burglar alarms, closed circuit television, public address systems, computerised locking systems, and door entry systems (consisting of no more than an electronic lock and a voice communication system).
Items that are caught by CIS include: closed-circuit television for traffic management, door access systems involving specialised doors or structural features, physical security measures such as gates, barriers, retractable and automatic bollards, security fencing, and safes integrated into the building structure. It also includes preparatory land works like excavating and erecting concrete posts for CCTV installation.
See HMRC link for more information – CISR14290 – The Scheme: construction operations: security systems
Contracts that Relate to Construction and Non-Construction Operations
Where a single contract relates to a mixture of construction and non-construction operations, all payments due under the contract are pulled into the Construction Industry Scheme. This is the case even if only one of the jobs is regarded as a construction operation.
Final Thoughts
Understanding the Construction Industry Scheme is essential for contractors and subcontractors. Vigilance and proactive contract management can prevent unwelcome surprises and ensure compliance with HMRC regulations. By maintaining clarity and rigor in documentation, businesses can focus on their core operations while confidently meeting their CIS responsibilities. For personalised guidance, businesses should consult a bookkeeping professional well-versed in CIS intricacies.
Get in touch with us today for all your CIS bookkeeping needs.
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