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If your business is a contractor under the Construction Industry Scheme (CIS), you may decide that it's helpful to divide it up for CIS purposes. You can do this by choosing to become a 'multiple contractor' - a business with several different divisions for operating the scheme. The CIS rules set out the steps you need to take to become a multiple contractor and the things you'll need to do once you get multiple contractor status.
This guide explains what you need to do if you want to become a multiple contractor, and how to operate under CIS once you are one.
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A multiple contractor is a contractor that has divided their business up into several sections, known as divisions, for CIS purposes. It might be the case that they already have a number of different divisions - such as regional branches - and have decided it's more efficient to operate through these branches as a multiple contractor under CIS.
A separate scheme is set up for each one of the contractor's divisions. Each division acts as if it's an individual contractor in its own right. They do their own paperwork and make their own monthly returns. They have their own separate accounts office reference that they use when they send HMRC their returns and pay them any subcontractor deductions they've made. But because they're all still part of the same business, they share the same unique taxpayer reference (UTR).
Some businesses operate a group structure where separate companies handle different aspects of their business, rather than just splitting their single company into divisions. Each group company is a separate 'legal entity' in its own right and nothing to do with the others for CIS purposes. Because they're separate companies, they will each have their own UTR.
To become a multiple contractor you need to make an 'election' to HM Revenue & Customs (HMRC). This is a written notice to the HMRC office that normally deals with any queries on your P35 returns.
Multiple contractor status takes effect at the start of a new tax year. So you'll need to notify HMRC before the start of the tax year in which you want to begin operating as a multiple contractor. You must include the following in your written notice:
Once HMRC has accepted your declaration, they'll treat each of the divisions you've identified as a separate contractor scheme. HMRC will give them:
Once your business becomes a multiple contractor it'll continue to follow the normal CIS rules for contractors, but each division will be responsible for doing this separately. Their responsibilities will include:
When one of your divisions issues a statement of deduction to a subcontractor they should put their own employer PAYE reference on it. When they pay deductions over to HMRC they must use their own 13 character Accounts Office reference. This will be on every monthly return they make too, along with the name of the division and the business's UTR. HMRC would like each division to use their Accounts Office reference whenever they get in touch with them.
Each division can choose to use its own address for correspondence with HMRC. If they do, HMRC will send all communications to that address, including notifications about any changes in their subcontractors' payment status. If not, they will use your head office address.
Although each division will operate its own scheme, your business will be responsible for all of them. So to avoid penalties for submitting late monthly returns, for example, you'll need to make sure they meet their responsibilities under CIS.
If you're a multiple contractor and you take over all or part of another contractor's business, you might bring some or all of that business' subcontractors into your own business. To do this, you'll need to tell HMRC within 90 days of the acquisition how you want them to treat these subcontractors. HMRC can treat them as:
Subcontractor verifications made previously by the business you've acquired won't normally transfer to your existing divisions, so you'll have to verify them again. But you can apply to HMRC for authorisation to treat certain existing verifications - usually for subcontractors working on current contracts - as if they'd been made by your own business.
Find out about CIS contractors' obligations
When you become a multiple contractor, you'll remain one until you tell HMRC you want to end your multiple contractor status. To do this, you will need to give HMRC notice before the start of the tax year in which you want to go back to operating as a single contractor.
You can always change back to being a multiple contractor by making another multiple contractor election whenever you want to.
