The Construction Industry Scheme applies to businesses involved in the construction industry. That includes builders, property developers, tradesmen, agencies supplying workers and so on. It can also apply to any business that spends an average of £1 million or more per year over three years on construction work.
If you use subcontractors or spend large amounts on construction work, you count as a contractor under the Construction Industry Scheme.
The Construction Industry Scheme treats you as a subcontractor if you work for a contractor, for example, as a self-employed tradesman or a smaller construction company with your own employees. The Construction Industry Scheme doesn’t apply to employees who are directly employed by the contractor.
You can be both a contractor and a subcontractor under the Construction Industry Scheme, for example, if your company works for a larger contractor and also subcontracts work out to self-employed tradesmen. Larger contractors can register as a ‘multiple contractor’. This allows the business to divide itself into smaller ‘divisions’ for the purposes of CIS. Each division then operates as though it is a contractor in its own right.