The Bristol office of Haines Watts is warning of the dangers of not being aware of HMRC’s Construction Industry Scheme (CIS) which many wrongly believe only affects those engaged in traditional building and construction activities.
Tax Director Paul Bray, a specialist in CIS matters, warns that many are still being caught unaware by the requirements of CIS which requires individuals, partnerships and companies across the property development and construction supply chain to register for the scheme. This includes those involved for example, in engineering works, heating and lighting installation, decorating and potentially even landscaping and gardening services, if undertaken as part of a wider project of construction.
Those businesses that do not register face a 30% tax hit on the labour element of their invoices and if they do register but do not keep their affairs in order and comply with stringent reporting requirements, they may also lose their entitlement to be paid gross, suffering a 20% tax charge at source.
Paul advises on CIS and has won several HMRC appeals on behalf of clients, said:
“This isn’t a new tax but it continues to catch businesses out. The scheme itself can be quite onerous and is not without its pitfalls, but it does allow those that keep their tax affairs in order to be paid gross and realise the tax benefits. In addition, it can provide a competitive advantage as some of the larger contractors will not permit businesses that are not registered with Gross Payment Status within the scheme to tender for works. This is partly because CIS registration often signals that a business has its house in order and is being well run.”
Paul warns that non-core construction businesses, such as property investors and commercial landlords carrying out more substantial works, are often unaware of CIS, requiring his assistance with tidying matters up as several recent legal cases highlight the severity of the penalties being levied for non-compliance and non-registration.
We can help.
If anyone feels they may be affected by this or requires advice, Paul is happy to have an initial free chat with anyone, he can be contacted at the Bristol office on 01179742569.
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