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Accountancy Services for those in the building trade

Working as a construction subcontractor in the UK can be challenging. The legislation surrounding working as a subcontractor is regularly updated and changed.

For example, in 2014 the UK government introduced a new system of tax for those who work in the building trade called the Construction Industry Scheme (CIS). The introduction of the scheme has added another layer of legislation and complication for those working in the building trade.

The first challenge is to understand if you are affected by this legislation. It can be difficult to determine whether you are working as a contractor or subcontractor, which makes it difficult to determine how to register yourself with HMRC and what taxes you have to pay.

If you are considered a subcontractor, you need to register for the CIS and pay your taxes under the rules governing that scheme. On the other hand, if you are actually an employee of the development firm you are working for you would be paying your tax under the PAYE scheme.

You need to be careful if you fail to register under the scheme you could be seen by the tax authorities as evading tax. It is not something you can afford to get wrong, which is why so many that work in the building trade are now engaging accountants with experience of providing services to the building trade.

It becomes even more complicated if you are working as a subcontractor on a development and then hire others to help you to complete the work. Potentially you could be considered both a contractor and a subcontractor.

As a contractor, you will need to register with the scheme as such and deduct 20% from your subcontractor’s wages. That 20% goes to the HMRC. At the same time, the developer who is paying you will have to garner your wages in the same way. It is all too easy for things to get complicated and difficult to keep track of everything.

To complicate things further there are some types of work that are not covered by the scheme. For example, carpet fitting, construction material deliveries, scaffolding hire, surveying and a few other related construction service.

Failure to comply with the scheme can result in tax investigations, which can lead to heavy fines. Even firms that are based outside the UK are affected by the legislation and can be prosecuted. As a result, if you work in the construction industry it makes sense to consult an accountant that has experience of the CIS scheme.

Posted by Mark
July 30, 2015

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