Tax tip: Off-payroll working rules and the construction industry scheme

A self-employed sub-contractor providing construction services will be subject to the construction industry scheme (CIS). This requires the main contractor to deduct income tax from payments for labour made to the sub-contractor unless the sub-contractor is registered for gross payment. The main contractor may also be responsible for operating a VAT reverse charge on payments to the sub-contractor.

If the sub-contractor is operating through an intermediary for example a company in which they have at least a 5% interest the main contractor will also have to consider the off-payroll working rules. These apply if:

• the main contractor is in the public sector or is a medium or large enterprise operating in the private sector unless it operates wholly overseas; and
• the sub-contractor would have been an employee of the main contractor if the contract had been direct between the sub-contractor and the main...