What are construction operations?

Contractors have considerable tax obligations and responsibilities under the construction industry scheme (CIS). They have to verify a new subcontractor that they engage. The appropriate details must be obtained regarding this subcontractor and submitted to HMRC which will then advise whether he must be paid net or gross.

The contractor has to prepare complete and submit a CIS contractor’s tax return each month (CIS300) giving details of the payments that they have made to their subcontractors in that fiscal month and any tax deducted.

If they are engaging a net registered subcontractor then the contractor has to withhold CIS tax from certain elements of his bill such as labour the profit he has made on materials (only the direct cost of the materials to the subcontractor can be paid gross) and travel and subsistence.

The contractor also has to supply the subcontractor with a...