Question:

Please can you ask the ceda membership if their service company are registered for CIS and deduct the tax for sub-contractors’ work? We need to know whether we need to deduct CIS when we subcontract catering equipment installation or service work. Therefore, has anyone been deducting or getting deducted from when subbing the work on both sides of the table basically?

Replies:

1. As a ceda Member please refer to Build UK: https://builduk.org/reverse-vat-a-practical-guide/

2. I think the company asking the question should ask their accountant. Our company are CIS registered and our subcontractors have to invoice in line with the Reverse VAT rules for install.

3. I’d be happy to see the outcome of this also if you could share. I am currently investigating my end, Our accountants are currently advising project works is CIS service work isn’t which is complicating things. It also depends on if your subby is CIS registered and if they are required to be, and if your customer is as well.

4. Our Service company isn’t required to engage with the CIS process.

5. We’re registered for CIS but understand it only applies where “permanent” fixtures are included in an installation, such as extraction systems or cold rooms.  Similarly, we deduct CIS from our sub-contractors for these works.  We understand CIS doesn’t apply to service work or installation of “plug in” / freestanding equipment. Additionally, if applying CIS to a customer’s invoice we also need to confirm whether DRC VAT is applicable as that project is now counted as “construction”.

6. We are CIS registered on the basis some tenders require this, as a form of traceability, however we do not invoice differently, or contract tax free work, this remains outside of our working knowledge.
You basically need to register, but unless you get involved in construction or take on labourers direct your processes should not be effected, you just need to justify or talk thru systems with clients / suppliers.

7. We have to be CIS registered to work for construction companies. Likewise, as we undertake small building works ourselves via sun trades we are then acting as a principle contractor to do this therefore again we need to do reverse vat. If the works, fall within the scope of CIS we should be requesting a domestic reverse charge VAT invoice if it has been invoiced with standard VAT. If the supply is for a sub-contractor and their CIS status isn’t gross the 20% or 30% would be deducted whether domestic reverse charge or standard VAT.

8. We pay install subcontractors through CIS as they are generally working on a live construction site (although they are registered gross so no deductions which makes it easier) but we would consider service work to be outside of the scope as it is not “construction work” https://www.gov.uk/what-is-the-construction-industry-scheme

9. Yes, we are registered for CIS. We only process CIS on project work, which is subject to VAT reverse charge, not any ad-hoc repairs.  This was agreed with the HMRC following a general inspection visit. This cuts down on a huge amount of admin time. I would suggest your member clarifies this query with the HMRC & get their response in writing.

10. Depends on if they are asking from a service perspective or project installs….

11. This is a very good question.
I feel like it is a very grey area that not many people actually understand how and when it should be applied.
In a previous life before here I worked in payroll and dealt with CIS for bona fide self-employed contractors which is quite straight forward.
When it comes to deducting from companies I don’t feel that it is very clear what does and doesn’t come under the scope.
We have some clients who do deduct from us, we are not registered as a contractor ourselves so all deductions are taken at the full rate.
To be honest I don’t worry about it too much as I report this in the same month and deduct it from that months PAYE so it has little real impact on us. My understanding of it may be incorrect but I believe that for example.
We are installing new equipment in a new kitchen, and we are working on behalf of a client who is a main contractor they will deduct from us, because they in turn will have a deduction made by the builder/ construction company whom they are billing.
I don’t not believe that call outs to equipment breakdowns come under the scope of the scheme.
Not sure if that is any help at all but this is how it works for us currently.
I would be interested to know if you do manage to get any clarification from HMRC.