CIS for larger businesses, public bodies and non-UK businesses
In this section:
- Multiple contractor status for larger businesses under CIS
- CIS where construction isn't your main activity
- Public bodies and organisations under CIS
- How CIS applies to businesses based outside of the UK
Multiple contractor status for larger businesses under CIS
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.
On this page:
- What is a multiple contractor?
- Becoming a multiple contractor
- Working under CIS as a multiple contractor
- Ending your multiple contractor status
What is a multiple contractor?
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 us their returns and pay us 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).
Difference between multiple contractor or separate businesses
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.
Becoming a multiple contractor
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 us 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:
- details of which subcontractors will be dealt with by each division's contractor scheme - for example 'all subcontractors paid by the London office' and so on
- a declaration that CIS payments are only paid to subcontractors in the groups you've included in your election notice - and that no payments are made to subcontractors outside these groups
Once we've accepted your declaration, we'll treat each of the divisions you've identified as a separate contractor scheme. We'll give them:
- Their own contractor scheme with its own individual employer PAYE (Pay As You Earn) reference, and a PAYE scheme if one is needed. This reference has a format like 123/A2345. We'll give them this even if they only use self-employed subcontractors and don't pay any employees through PAYE.
- Their own Accounts Office reference - a 13 character identifier that has a format like 123PA00012345.
Working under CIS as a multiple contractor
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:
- Verifying new subcontractors with HMRC. They can either do their own verifications or rely on those done by other divisions, but every new subcontractor must be allocated to at least one division.
- Paying each subcontractor correctly depending on their tax status, working out how much - if any - deduction to make.
- Keeping a record of each payment, the cost of any materials and any deduction they've made.
- Giving statements of deduction to subcontractors whose pay they've made a deduction from.
- Making monthly returns to HMRC and paying over any deductions they've made. They do this using their own Accounts Office reference number and payslip booklet.
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. We'd like them to use their Accounts Office reference whenever they get in touch with us.
Each division can choose to use its own address for correspondence with us. If they do, we'll send all communications to that address, including notifications about any changes in their subcontractors' payment status. If not, we'll 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.
Acquiring another contractor's business
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 us within 90 days of the acquisition how you want us to treat these subcontractors. We can treat them as:
- being separate to your existing divisions
- new additions to your existing divisions - it's up to you to allocate them
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
Ending your multiple contractor status
When you become a multiple contractor, you'll remain one until you tell us you want to end your multiple contractor status. To do this, give us 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.
