Tax obligations of contractors in the construction industry scheme

Contractors in the construction industry have considerable regular tax compliance obligations and burdens in order to comply with the fiscal requirements of the construction industry scheme (CIS). These requirements are both complex and demanding and place a huge burden on the contractor to correctly comply with them.

In this article we highlight six of the main areas that contractors have to deal with on a regular basis.

1) Identification of construction operations

Contractors have to decide whether the subcontractor they are engaging is genuinely performing ‘construction operations’ as defined within the relevant tax legislation.

Construction operations are defined in FA 2004 s 74 – see The legislation. In essence the legislation contains two lists namely operations which are construction operations and those which are not.

The question of deciding whether an activity performed by a subcontractor amounts to construction operations...