CIS Exempt activities

[Mystroe]

I would be interested to read any view points and interpretations of this page from the Construction Industry Scheme reform manual - CISR14240 (quoted below)

My interpretation is that kitchen fitting and floor finishes are exempt from CIS if they are not part of a construction project. For example home owner wants their kitchen and floor replaced (not carpet) - contracts a kitchen company who then subcontracts the work out (No other work is being carried out). My interpretation is that the sub contracted work (new kitchen and new wood floor) is not subject to CIS deductions.

All replies welcome.

This is a copy and paste from the manual:

Finishing operations

This provision covers operations that bring a construction project to completion such as

• site restoration and landscaping, including pumping out and draining of water
• installation of instrumentation systems such as building environmental controls
• installation, structural repair and painting of lamp standards, permanent traffic lights, parking meters, traffic signs and other street furniture
• dismantling scaffolding, falsework and formwork
• screeding, and the fitting of flooring and floor-coverings (including vinyl and linoleum but not carpeting) where these form part of the building specification
• installation of building fittings such as safety eye-bolts
• kitchen and bathroom fitting
• tiling
• fitting of thermal insulation, lagging or soundproofing as part of a wider project of construction
• shop fitting
• installation of built-in refrigeration equipment, such as cold stores (not free-standing refrigerators)
• installation of fixed furniture (except seating) for example, shelving and fixed work stations.

However, the following activities are not considered to be construction operations

• manufacture and delivery of building materials
• non-structural repair of street furniture (for example, replacement of lighting elements or defective components in traffic lights or parking meters)
• installation of seating
• fitting of carpeting (this is excluded in all circumstances)
• fitting of vinyl and other floor-coverings in premises not undergoing construction or alteration
• fitting of thermal insulation or soundproofing in premises not undergoing construction where this has no effect on the fabric of the building.
• in isolation, the hire of temporary free standing traffic lights

 

[Scalloway]

But from

https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14020

The expression ‘construction operations’ covers almost anything that is done in the United Kingdom and its territorial waters to a building, structure, civil engineering work or installation, whether of a permanent or temporary nature. This includes:

construction
alteration
repair
extension
demolition
dismantling.
Anything done on a construction site in connection with construction work is therefore likely to be a construction operation unless it falls in one of the following classes:

It is clearly not, by its nature, a construction operation. This applies to activities such as the running of canteen, hostel, medical, safety, security or temporary office facilities.
It is specifically excluded from the Scheme by FA04/S74 (3) (the excluded operations are dealt with in detail later in this section).

I would definitely class kitchen fitting as an operation liable to CIS.

 

[billmccallum1957]

Kitchen fitting is expressly included in list 1, its only flooring that is excluded.

 

[UK Contractor Accountant]

Only certain flooring is excluded-laminate and wooden flooring comes within CIS

 

[Newchodge]

I can see that he new floor is exempt, but if they sub-contract the new kitchen, why do you think that is exempt?

 

[Mystroe]

I can see that he new floor is exempt, but if they sub-contract the new kitchen, why do you think that is exempt?

Under the heading Finishing operations, where kitchens and bathroom fitting is listed it is preceded by the sentence operations that bring a construction project to completion.

So if a replacement kitchen is fitted as an isolated project, what construction project is being brought to completion?

 

[Mystroe]

Only certain flooring is excluded-laminate and wooden flooring comes within CIS

That's incorrect:
However, the following activities are not considered to be construction operations
fitting of vinyl and other floor-coverings in premises not undergoing construction or alteration

 

[Mystroe]

But from



I would definitely class kitchen fitting as an operation liable to CIS.

The HMRC interpretation in your link is quite a blanket all encompassing interpretation of the Finance Act 2004 (Section 74). Bare in mind that there are quite a few HMRC exemptions to activities which could easily be construed as construction activities.

Further a kitchen is not a prerequisite component of a building or structure. So it would be fair to say a kitchen is not an integral element of a building. In other words a building is a building with or without a kitchen. What I'm leading to then is that alterations of a kitchen does not constitute alterations of the building..

 

[UK Contractor Accountant]

Finishing operations
Operations included fitting of:

• floor coverings, such as vinyl, linoleum (but not carpet) and laminated wooden flooring
• pigeon mesh
• TV aerials and satellite receivers Installation of refrigeration units

But only where these operations render complete a building or structure that has been constructed or altered.

 

[Mystroe]

Finishing operations
Operations included fitting of:

• floor coverings, such as vinyl, linoleum (but not carpet) and laminated wooden flooring
• pigeon mesh
• TV aerials and satellite receivers Installation of refrigeration units

But only where these operations render complete a building or structure that has been constructed or altered.

The above is from the
Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340)
Updated 28 July 2015

More up to date (3 August 2016) is the CIS reform manual which I have quoted:

However, the following activities are not considered to be construction operations
fitting of vinyl and other floor-coverings in premises not undergoing construction or alteration

 

[Newchodge]

The whole section is about finishing operations. If it is a new construction, like fitting a new kitchen, the whole section is irrelevant. Even if it weren't fitting kitchens and bathrooms is in the top section which requires CIS reporting.

 

[Mystroe]

The whole section is about finishing operations. If it is a new construction, like fitting a new kitchen, the whole section is irrelevant. Even if it weren't fitting kitchens and bathrooms is in the top section which requires CIS reporting.

I don't quite follow what you've said here. I would say that if there is a construction project which is a going concern - then fitting a kitchen is relevant. On the other hand if there is NO construction project which is a going concern then fitting a kitchen is outside the CIS remit.

 

[Newchodge]

Fine.

 

[Mystroe]

Well I spoke to a Construction Industry expert yesterday and they advised me that CIS only covers the Construction Industry. Home improvements and domestic work is a different industry and CIS exempt.

 

[UK Contractor Accountant]

Hope you got that in writing -did you get the officers name?

 

[UK Contractor Accountant]

http://www.accountingweb.co.uk/tax/business-tax/cis-so-who-has-to-register-by-rebecca-benneyworth

 

[Newchodge]

Well I spoke to a Construction Industry expert yesterday and they advised me that CIS only covers the Construction Industry. Home improvements and domestic work is a different industry and CIS exempt.

So, a householder takes on someone to fit a new kitchen. That is not covered by CIS.

A householder takes on someone to fit a new kitchen. That person sub-contracts the job to someone else. That is covered by CIS. However, if you know all the answers, why did you ask the question?

 

[UK Contractor Accountant]

Of course homeowners are not going to deduct to CIS- it's people down the supply chain that are affected.

 

[Mystroe]

So, a householder takes on someone to fit a new kitchen. That is not covered by CIS.

A householder takes on someone to fit a new kitchen. That person sub-contracts the job to someone else. That is covered by CIS. However, if you know all the answers, why did you ask the question?

HMRC's interpretation of the Finance Act 2004 has evolved alot over the years, so it's no wonder it leaves people asking questions about what exactly is covered. A simple rendition would be: Do you work in the construction industry i.e. on construction sites, using construction compliant tools, and other construction regulatory statutes - after all it is the Construction Industry Scheme?

Asking questions like these helps to inform others and also prompts us to refine our understanding of the situation.

To complicate matters, the CIS reform manual has been updated this month (August 2016) which for those who are very busy - it has been challenging to assimilate HMRC's latest viewpoints..

 

[IanC6571]

I looked at CIS as we work on New Builds for our clients. We cannot work on the 'Build' untill the client has concluded all legal purchase obligations and completion has been finalised.

As we are working on our clients New Home or Buy to Let, I drew the coclusion that the Construction Design and Management Regulations 2015 (CIS Requirement fall within). do not apply. We have had to sit few a few Health & Safety Briefings & follow 'site' requirements on Ladder use, but as a matter of course we are not part of 'the build'.

Of course we would always carry a Dynamic Risk Assesment.

 

[Newchodge]

CIS has nothing to do with Health and Safety.

If you are working directly for the house owner CIS is irrelevant, unless you sub-contract the work.

 

[Mystroe]

I looked at CIS as we work on New Builds for our clients. We cannot work on the 'Build' untill the client has concluded all legal purchase obligations and completion has been finalised.

As we are working on our clients New Home or Buy to Let, I drew the coclusion that the Construction Design and Management Regulations 2015 (CIS Requirement fall within). do not apply. We have had to sit few a few Health & Safety Briefings & follow 'site' requirements on Ladder use, but as a matter of course we are not part of 'the build'.

Of course we would always carry a Dynamic Risk Assesment.

That's very interesting - what's the nature of work you do?

 

[IanC6571]

We work at the end of the food chain! Soft furnishings for windows. Curtain Tracks, Poles, Blinds, Shutters etc........... by the time the Kitchen has been fittied and work completed, people have exceeded their budgets .............. but we manage.

 

[talkinpeace]

If your client is another building firm then CIS applies
If your client is the end user (householder or business) CIS does not apply

 

[Mystroe]

If your client is another building firm then CIS applies
If your client is the end user (householder or business) CIS does not apply

How do you factor the CIS reform manual exemptions into this?

 

[Scalloway]

How do you factor the CIS reform manual exemptions into this?

The exemptions relate to the laying of flooring coverings, and don't include laminated floor coverings.

https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14240

However, the following activities are not considered to be construction operations

• manufacture and delivery of building materials
• non-structural repair of street furniture (for example, replacement of lighting elements or defective components in traffic lights or parking meters)
• installation of seating
• fitting of carpeting (this is excluded in all circumstances)
• fitting of vinyl and other floor-coverings in premises not undergoing construction or alteration
• fitting of thermal insulation or soundproofing in premises not undergoing construction where this has no effect on the fabric of the building.
• in isolation, the hire of temporary free standing traffic lights

Anything else will have CIS applied if a contractor gets a subcontractor.

I suspect you are not going to get a different opinion here. Either you or your accountant should take this up with HMRC if you are not satisfied.

 

[MGM47]

Sorry new member and not sure where to post this but is the fitting of insulation in its own right exempt from cis?

 

[Scalloway]

not sure where to post this

Click on the orange "Post New Thread" at the top right of the forum.

is the fitting of insulation in its own right exempt from cis?

From here

https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14240

the following activities are not considered to be construction operations
...
fitting of thermal insulation or soundproofing in premises not undergoing construction where this has no effect on the fabric of the building.