Query over CIS and vinyl floor laying

[last of the summer wine]

Hi,

We are a Limited Company registered as a Contractor for CIS, all the subcontractors we use are registered and verified etc. and our business is vinyl floor laying.

I find the HMRC articles regarding CIS for vinyl floor coverings somewhat confusing and would appreciate a little help if possible. This is from the HMRC website:

"The fitting of carpets, linoleum, vinyl sheeting and other forms of floor covering is not a construction operation when carried out in isolation, that is, when done in a situation that does not also involve construction work."

I read that to mean that vinyl floor laying is only covered by CIS if it’s part of a completely new build, and not just carried out as general refurbishment of, for example, existing schools, hospitals, offices, private dwellings where the client simply wants new flooring laid, (which is what our work consists of.)

If that is the case, when we use subcontractors would we just pay them their full invoice value with no deduction for tax and only have to submit a nil return for that period??

Appreciate any guidance you can give, thank you.

 

[DWS]

Construction is not just new builds, most
building projects will fall within CIS, if you are carrying out the works as part of a refurbishment then you will be liable to CIS, carpets are an exception to this unless they form part of a mixed supply.
If the only works being carried out in these premises are flooring works then it will not be liable to CIS.

 

[Newchodge]

replacing an existing floor covering with vinyl is not covered by CIS. Going into a house in which a wall has been moved and laying vinyl in the newly created area (smaller or larger) is covered.

 

[last of the summer wine]

Thank you both for your replies. So, if simple replacement of existing floor covering is not covered, if we use a self employed subcontractor for part or all of the job, we don't have to deduct tax from his invoice and assume he will account for it himself in his self assessment? Is that right? I thought the whole point of the Scheme was to ensure HMRC didn't miss out on tax!

 

[DWS]

That is the whole point of the scheme but I am sure you understand that not everything can be covered, there are plenty of exceptions.
On the example you make, yes if you are going to a job and the only works being carried out is to relay a vinyl floor then this will not be liable to CIS, if you are brought in by a Contractor and there is other construction work being carried out then it will be liable to CIS.

 

[Newchodge]

Thank you both for your replies. So, if simple replacement of existing floor covering is not covered, if we use a self employed subcontractor for part or all of the job, we don't have to deduct tax from his invoice and assume he will account for it himself in his self assessment? Is that right? I thought the whole point of the Scheme was to ensure HMRC didn't miss out on tax!

Householder gets you to lay flooring and you sub-contract the job? CIS not needed.
Householder gets builder (or you) to do work, they get you to do the flooring part, you sub-contract the job, CIS is needed.

 

[last of the summer wine]

That is the whole point of the scheme but I am sure you understand that not everything can be covered, there are plenty of exceptions.
On the example you make, yes if you are going to a job and the only works being carried out is to relay a vinyl floor then this will not be liable to CIS, if you are brought in by a Contractor and there is other construction work being carried out then it will be liable to CIS.

Thank you, but it still doesn't make a lot of sense to me. Quite apart from what difference does it make what the job is, whether it be floor laying, decorating, room extensions, bricklaying etc., if you are using a subbie, you are using a subbie, and as I originally said, I thought the whole point of deducting their tax was so that HMRC didn't dip out. So, one last question please - your last sentence about if there is other construction work being carried out, does that have to be happening at the same time? Supposing you go in one week and other trades go in the next?

 

[last of the summer wine]

Householder gets you to lay flooring and you sub-contract the job? CIS not needed.
Householder gets builder (or you) to do work, they get you to do the flooring part, you sub-contract the job, CIS is needed.

Thank you. So, where CIS is not needed we just pay the subbie their whole invoice value without deducting any tax?

 

[Newchodge]

Thank you. So, where CIS is not needed we just pay the subbie their whole invoice value without deducting any tax?

Correct.

 

[Newchodge]

Thank you, but it still doesn't make a lot of sense to me. Quite apart from what difference does it make what the job is, whether it be floor laying, decorating, room extensions, bricklaying etc., if you are using a subbie, you are using a subbie, and as I originally said, I thought the whole point of deducting their tax was so that HMRC didn't dip out. So, one last question please - your last sentence about if there is other construction work being carried out, does that have to be happening at the same time? Supposing you go in one week and other trades go in the next?

Sub-contracting happens in many, many areas. CIS only applies to the construction industry, because of its long and dishonourable history of cash in hand jobs and tax evasion. If it only applies to construction there has to be a definition of construction. With any definition there must be borders and there will always be grey areas around the borders. If in doubt, apply CIS. It is not a charge it is merely a pre-payment of tax due, so applying it when it may not have been necessary involves no actual cost to anyone. Not applying it when it is necessary may involve HMRC penalties.

 

[last of the summer wine]

Sub-contracting happens in many, many areas. CIS only applies to the construction industry, because of its long and dishonourable history of cash in hand jobs and tax evasion. If it only applies to construction there has to be a definition of construction. With any definition there must be borders and there will always be grey areas around the borders. If in doubt, apply CIS. It is not a charge it is merely a pre-payment of tax due, so applying it when it may not have been necessary involves no actual cost to anyone. Not applying it when it is necessary may involve HMRC penalties.

Thank you very much, it makes a little more sense now, although I'm a still a bit surprised HMRC haven't make it a blanket scheme for when any self employed subcontractors are used, regardless of what trade or work is involved. Look at all those unpaid tax collectors they'd have working for them! You've also confirmed my thoughts that if CIS was applied when not necessary, no damage done, so thank you.

 

[last of the summer wine]

Sub-contracting happens in many, many areas. CIS only applies to the construction industry, because of its long and dishonourable history of cash in hand jobs and tax evasion. If it only applies to construction there has to be a definition of construction. With any definition there must be borders and there will always be grey areas around the borders. If in doubt, apply CIS. It is not a charge it is merely a pre-payment of tax due, so applying it when it may not have been necessary involves no actual cost to anyone. Not applying it when it is necessary may involve HMRC penalties.

Sorry to be a pain, but can I ask one more question please. Does CIS only apply to self employed subcontractors? If we (as a limited company and registered Conractor), accept a flooring contract from 'Joe Bloggs Construction' in premises where other works are being carried out by other trades, are we then technically a subcontractor of 'Joe Bloggs Construction', and will they have to deduct tax from our invoice to them?

 

[Newchodge]

Sorry to be a pain, but can I ask one more question please. Does CIS only apply to self employed subcontractors? If we (as a limited company and registered Conractor), accept a flooring contract from 'Joe Bloggs Construction' in premises where other works are being carried out by other trades, are we then technically a subcontractor of 'Joe Bloggs Construction', and will they have to deduct tax from our invoice to them?

It applies to all entites carrying out sub-contract work. Your organisation needs to register as both a Contractor (using sub-sontractors) and a Sub-contractor (providing services to Contractors).

 

[DWS]

So, one last question please - your last sentence about if there is other construction work being carried out, does that have to be happening at the same time? Supposing you go in one week and other trades go in the next?

It doesn’t have to be happening at the same time it just needs to be part of the same project, the building work could have finished and then you go in on your own 1 month later to do the flooring but it is still part of the project and therefore is still within CIS.
If it makes any difference I have a couple of floor layer clients and any work that they do for Contractors has CIS deducted even though they could probably argue that some of the works does not fall within the scheme, as Newchodge says if in doubt apply CIS

 

[Newchodge]

I'm a still a bit surprised HMRC haven't make it a blanket scheme for when any self employed subcontractors are used, regardless of what trade or work is involved. Look at all those unpaid tax collectors they'd have working for them!

Ssssshhh

 

[last of the summer wine]

It doesn’t have to be happening at the same time it just needs to be part of the same project, the building work could have finished and then you go in on your own 1 month later to do the flooring but it is still part of the project and therefore is still within CIS.
If it makes any difference I have a couple of floor layer clients and any work that they do for Contractors has CIS deducted even though they could probably argue that some of the works does not fall within the scheme, as Newchodge says if in doubt apply CIS

That's great, thank you DWS.

 

[last of the summer wine]

Ssssshhh

?

 

[last of the summer wine]

It applies to all entites carrying out sub-contract work. Your organisation needs to register as both a Contractor (using sub-sontractors) and a Sub-contractor (providing services to Contractors).

We are definitly registered as a Contractor for CIS and I feel sure we would have registered for both at the same time. Is there any way of knowing for sure - I can't find anything on our Gov Gateway site to confirm one way or the other.

 

[DWS]

The Contractor will have to verify you and if you are not registered as a sub-contractor you will come back as unknown with a 30% deduction rate so just phone the CIS helpline and they will register you straight away.
Or just phone before you give the contractor your details to check and see.

 

[last of the summer wine]

The Contractor will have to verify you and if you are not registered as a sub-contractor you will come back as unknown with a 30% deduction rate so just phone the CIS helpline and they will register you straight away.
Or just phone before you give the contractor your details to check and see.

Will do, thank you.