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
How CIS applies to businesses based outside of the UK
The rules of the Construction Industry Scheme (CIS) cover payments made by contractors to subcontractors for construction work they do.
The scheme covers all 'construction operations' - almost all types of construction work - done in the UK. It makes no difference where the contractor and the subcontractor are resident - CIS still applies whether they're resident in the UK or not.
This guide will help you if your business is a contractor or subcontractor that isn't resident in the UK but does construction work covered by the scheme. It explains what you'll need to do before you start working, and outlines the steps you'll need to take to claim a repayment if you're exempt from UK tax.
The guide will also help you if you represent a non UK-resident business that does construction work in the UK. But it won't be relevant if you're a self-employed individual who's come to the UK to work in the construction industry.
On this page:
- How CIS applies to non-resident businesses
- Contacting HMRC to register for CIS as a non UK-resident
- How subcontractors get paid if there's a double taxation agreement
How CIS applies to non-resident businesses
CIS can apply to any business that does construction work in the UK - or in UK territorial waters - whether it's resident in the UK or not. So no matter where your business is based, the scheme will apply if you're:
- a contractor who pays subcontractors for construction work they do in the UK
- a subcontractor who gets paid by contractors for doing construction work in the UK
It doesn't matter where the payment is made, either - it's just down to where the work was done and whether it was the type of work that's covered by the scheme.
What are UK territorial waters?
UK territorial waters means the sea around the UK as far out as the 12 mile offshore limit. Construction work in UK territorial waters covered by CIS could include building or maintaining an oil platform, for example.
How does CIS affect non-resident businesses?
We treat non-resident contractors and subcontractors in the same way as we treat UK contractors and subcontractors. This means that contractors will have to:
- register with us for CIS
- verify their subcontractors with us (ie check whether they have registered with HM Revenue & Customs (HMRC) and what their tax status is)
- make deductions from subcontractors' pay if necessary - and pay them over to us
- keep proper records and do certain paperwork, including giving deduction statements to subcontractors
- send us monthly returns
Subcontractors will have to:
- register with us if they want to avoid higher rate deductions
- keep proper business records
- send us an annual return of their profits or losses (unless you're exempt from UK tax under a double taxation agreement)
Read about contractors' obligations under CIS
Read about subcontractors' obligations under CIS
You can read an overview of CIS and how it works in our booklet CIS340 'Construction Industry Scheme - guide for contractors and subcontractors'.
Contacting HMRC to register for CIS as a non UK-resident
Non UK-resident businesses that pay subcontractors for construction work in the UK, and non-resident businesses that intend to work as subcontractors in the UK, need to contact the HMRC Centre for Non-Residents. This includes businesses in the Republic of Ireland (Eire) that don't have a UK base and aren't liable for Corporation Tax in the UK.
If you intend to work in the UK as a construction industry contractor you'll need to register before you take on your first subcontractor. It makes no difference whether you're likely to pay them gross or after making a deduction.
There are four ways of contacting our Centre for Non-Residents to register with the UK CIS. You can contact us by:
- post
- telephone
- fax
Contacting us by post
The postal address for the HMRC Centre for Non-Residents is:
HM Revenue & Customs Centre for Non-Residents (Construction Industry
Scheme)
Fitz Roy House
PO Box 46
Nottingham
NG2 1BD
England
Contacting us by email
You can contact the Centre for Non-Residents by email.
Contacting us by telephone or fax
You can call the following telephone numbers to contact the Centre for Non-Residents:
- Tel 0115 974 1948 for information about how CIS applies to non-residents, or to find out about double taxation agreements with other countries
- Tel 0115 974 1948 to talk about registration and to get other information about operating the scheme
- Tel 0115 974 1940 to talk about a claim you've already made under a double taxation agreement
You can also contact us by fax on 0115 974 2063.
When to register
If you intend to work in the UK as a subcontractor in the construction industry you will need to register with us before you actually start working.
If you don't, contractors will have to make a deduction at the higher rate - 30 per cent - from your pay before you get it.
How subcontractors get paid if there's a double taxation agreement
If your business is resident in a country that has a double taxation agreement with the UK, you might be able to claim exemption from UK tax.
Even if your business is exempt from UK tax under a double taxation agreement, it'll still have to follow the rules of CIS and operate the scheme in the normal way.
What is a double taxation agreement?
'Double taxation' happens when income gets taxed in two countries - the one where a business or person is resident and the one where they earn the income. A double taxation agreement is an agreement between two countries to reduce the amount of tax that's actually paid. The aim is to make sure the taxpayer only pays the same, or close to the same, amount of tax as they would have paid if they'd earned the income at home.
You can read more about double taxation relief in the International section of the HMRC website.
Read about double taxation relief for non UK-residents
Claiming back deductions if there's a double taxation agreement
If you're a subcontractor and the country your business is resident in has a double taxation agreement with the UK, then it may be possible to claim back some of the deductions that contractors have made from your pay.
You'll be able to make a claim if the profits your business makes from construction work in the UK aren't earned through a permanent UK establishment that you're using to carry on your business. Our definition of a permanent establishment would include:
- an office or other place of management
- a branch of your business
- a factory or workshop
- a location like a mine, quarry, oil well or gas well
A building site or construction project counts as a permanent establishment too if it lasts for longer than a certain period. This period is specified in the terms of the double taxation agreement and is generally between 3 and 24 months - you'll need to check.
You'll find a list of double taxation agreements between the UK and other countries in our booklet IR20 'Residents and non-residents: Liability to tax in the United Kingdom'.
Obtain booklet IR20 (PDF 160K)
How to claim
To claim exemption from UK tax under a double taxation agreement, contact the HMRC Centre for Non-Residents at:
HM Revenue & Customs Centre for Non-Residents (Construction Industry
Scheme)
Fitz Roy House
PO Box 46
Nottingham
NG2 1BD
England
If we agree your business is exempt from UK tax, we'll repay your deductions.
If your business is a company, first set off any deductions that contractors have made from your pay against:
- your own PAYE (Pay As You Earn) and National Insurance contributions (NICs) liability if you have one
- any deductions you've made from your own subcontractors that you'd normally have to pay over to us
If there's anything still outstanding once you've done this we'll repay it when your company makes its annual return on form P35.
If your business isn't a company you can claim a refund by contacting the HMRC Office where you're registered for CIS.
Claiming back deductions if there's no double taxation agreement
If there's no double taxation agreement with the country where your business is resident then it won't be exempt from UK tax. But the deductions that contractors have made from your pay are normally allowable against your tax bill in the UK. This means we'll reduce your tax bill for the year by the amount that's already been paid over to us in deductions.
It's possible that you could make little or no profit during the tax year. If this happens, you can claim a repayment from us. If we agree, we'll pay you back the difference between what you've paid and what - if anything - you owe in tax.
If your business is a limited company, you'll need to claim your repayment when you send us your annual return on form P35.
Decide whether your work comes within CIS
Find out if you're a contractor or a subcontractor under the CIS
