Introduction
It is important to recognise that not all tasks that might be thought as construction work fall within the scope of the CIS regulations. It is also the case that some tasks that are not perceived as relevant to CIS, do fall with the scope of the regulations. Unless the correct CIS tax deductions are made, it leaves the defaulting engager open to prosecution and making good the uncollected tax.
We set out below the more obvious CIS relevant and non-relevant activities. Further clarification can be found in HMRC's CIS r14330.
Activities outside the scope of CIS
Work on a private dwelling at the request of the householder (including installing bathrooms and kitchens).
Delivery of materials to site.
Surveying and architecture.
Carpet and vinyl fitting in isolation.
Hire of scaffolding provided labour is not provided to erect.
Cleaning the outside of buildings during the course of, or post construction (see note below).
Repairing systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection.
Maintaining systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection.
Extending systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection. The distinction between extending and installing must be considered carefully. See the note below.
Installing security systems such as burglar alarms and CCTV.
Installing fire detector and alarms limited to audible/visual warnings.
Replacing locks that do not require alteration of door
Fencing: light-duty erected in isolation where post set without concrete.
Installation or repair of a stair lift (distinct from chair lift).
Activities that fall within the scope of CIS
Working on a dwelling at the request of the landlord or their agent.
Construction, alteration, repair, decoration to fabric of building.
Construction, alteration, repair, decoration to conservatories, green houses and garden sheds if based on a foundation.
Construction, alteration, repair, decoration to construction site offices and huts.
Cleaning the inside of a building during the course of, and post construction (see note below).
Installing systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection.
Hire of scaffolding where labour is provided to erect.
Installing kitchens and bathrooms as part of a new build or refurbishment.
Installing, repairing, and/or decorating doors.
Ground works.
Fencing: where it is erected as part of a construction project.
Fencing: light-duty erected in isolation where post are set in concrete.
Installing fire detector/alarms that interact with structural protection systems.
Installation of electrical (including neon) signs.
Installation or repair of a chair lift (distinct from stair lift).
Installation of solar panels (unless the contract is with a private householder).
Installation of water meters, water softeners and water treatment systems.
Installation of manufactured items (e.g. windows) under a ‘supply and fix’arrangement. If just a ‘supply’ to site, it falls outside the scope of CIS.
Supply of wet concrete to site where delivery includes pumps to move wet mix around the construction site.
Extension v. Installation
The difference between extension and installation is subjective and therefore open to interpretation. The HMRC cite by way of example:
- Adding a new radiator, or a spur for an extra plug, would be classed as extensions; but
- Adding a new supply to a different part of the building, or wiring up a new electrical sign, would be deemed to be installations.
As always in matters of tax compliance where there are no black and white answers, but only shades of grey … document your reasoning for why you made your decision just in case you are challenged by the HMRC. It can also be a case of if you know your are stretching the limits of credulity, you can't complain if the decision goes against you in an HMRC investigation.
Does cleaning services fall within the scope of CIS?
The reason why this is important is many cleaning companies refuse to undertake work when CIS will be deducted, even when the regulations indicate that the work they do falls within the scope of CIS.
HMRC's CIS r14110 sets out the rules when cleaning does, and does not, fall within the scope of CIS.
The guidance confirms that the internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration falls within the scope of CIS.
It goes onto point out:
- it only applies to cleaning undertaken in the course of, or on completion of construction work.
- it does not apply to the external cleaning of buildings and structures.
- it does not apply to routine cleaning undertaken on existing commercial or industrial premises not undergoing construction work.
The guidance also considers the situation of cleaning prior to handover. After construction, commercial or domestic buildings commonly remain in the hands of the developer until sold.
Following the above principles, cleaning carried out for the contractor/developer during construction is subject to CIS, so is the cleaning operation carried out when construction is completed. However, subsequent cleaning done after completion and while the building remains in the hands of the contractor/developer is outside the scope of the Scheme.
This is one area of CIS compliance which is all too easy to push the limits of what the HMRC will accept. For example. is an essential deep clean carried out just before construction work begins subject to CIS because it is carried out in the course of construction? Is a post clean of the inside of a building also subject to CIS when it immediately follows the cessation of the building work? We would suggest the answer is decided when the timing, billing and payment of the cleaning work is sufficiently separated from the billing and payment of the construction work undertaken. If the 'separation' is not enough … then following the CIS deduction rules would apply.
