Construction industry scheme

The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of sub-contractors in the construction industry under-declaring or failing to notify their chargeability to UK tax.

The scheme operates to withhold tax at source at the point of making a contract payment (ie a payment made by a contractor under a construction contract), thereby reducing the risk of a subsequent default by the sub-contractor. However broadly speaking, if the sub-contractor can, among other matters, prove it has complied with its tax obligations it can apply to receive payments gross.

The scheme was overhauled in 2006 and an improved regime came into effect on 6 April 2007.

For more information, see Practice Note: The construction industry scheme—when does it apply?

Key definitions

Because the CIS rules apply solely to contractors and sub-contractors (or, where relevant, their nominees) providing or operating under a contract for the provision of construction operations (ie a construction contract), it is important to understand the meaning of each of these defined terms. These key definitions are outlined below and also covered in more detail in Practice Note:

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