Starting a new business? Get 40% off our accountancy services for 3 months! 😀


Task forces for HM Revenue & Customs (HMRC) have increased revenues from the construction industry by seven per cent. HMRC is challenging those construction companies in the UK that pay their workers as though they are self employed, when they should in fact fall within the Pay As You Earn banner under HMRC employment status guidelines.

More than £130 million has been recovered by HMRC task forces so far. In April 2015, new legislation will come into force, making it compulsory for construction companies to provide a report each quarter to confirm that employment status has been checked, and to provide evidence when a worker isn’t being taxed through PAYE. For any firm that doesn’t comply with the new regulations, a penalty or fine will be issued.

Due to the nature of subcontracted work, there may be errors or confusion leading to employment status being incorrectly identified. If a construction company fails to supply the correct documentation, HMRC may initiate an investigation.

What is CIS?

The Construction Industry Scheme is a set of rules that applies to anyone working in the industry on a self employed basis. If you are a contractor working under CIS, you have specific responsibilities you must adhered to. If you carry out work on behalf of someone else, you are likely to be employed and won’t be taxed under CIS. You will be taxed under the PAYE system as an employee. Subcontractors working in CIS have money deducted from their payments by the contractor, who then passes the money to HMRC. A contractor has to register to be included in the scheme. Although a subcontractor doesn’t have to register with CIS, they will have a higher percentage of money deducted if they don’t.

Are you employed or self employed?

An employee generally works for someone under a contract. Employees are taxed under PAYE, while someone who is self employed will be responsible for their own tax under the self assessment system. If you are working for someone as an employee, you will be expected to perform the duties yourself and won’t be allowed to send anyone to work in your place. If you aren’t allowed to choose when or where you work, you are most likely employed.

You are self employed if you decide which jobs to accept, work when and where you like, and can send someone else in your place. If you have to provide tools yourself, you are probably self employed.

CIS and employment status are complex areas. If you require some assistance or advice, please let us know.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

More posts by this author
Inline Feedbacks
View all comments

Read more posts...

Get Ready for Small Business Saturday UK 2022

Small Business Saturday started in the US in 2010, on the first Saturday following Thanksgiving. It aims to encourage shoppers to consider…

Read More

Architects and Tax

Architecture is a highly diverse sector when it comes to tax. It’s partly down to the type of businesses that carry out…

Read More

June 2022 Client of the Month: Manea Kella

This month we spoke to Adrian Manea, architect and director at Manea Kella, a London based RIBA Chartered architecture and interior design…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.


You only need this service if you want us to complete the bookkeeping on your behalf.

Would you prefer to complete your own bookkeeping?


Call us on 020 3355 4047 if you’re not sure.