• Chris Muckell

Updated: Mar 20, 2019



When you’re working in the construction industry, there are some things that are worth knowing more than others, like these...


Example A) You probably don’t need to know how to spell pterodactyl, but you’ll probably want to know the difference between an engineering brick and a wheelbarrow.


Example B) You probably don’t need to know Tony Hawk was the first person to land a 900 but, for the sake of getting embarrassed in front a Homebase store assistant, you might want to know that tartan paint isn’t a real thing.


Example C) You probably don’t need to know which entrepreneurs became successful after 40, but you will definitely need to know all about the Construction Industry Scheme (or the CIS, for those who don’t want to type Construction Industry Scheme every single time).


Thankfully, that’s what we’re here for. So, to help you out, engineering bricks don’t have a wheel at the front (or any wheels at all), the tartan paint thing is a first day trick every labourer has fallen for and, last but by no means least, the CIS is basically something Her Majesty’s Revenue and Customs intro’d a few years back to try and clamp down on tax evasion, which construction companies were doing by deducting tax from subcontractors at source whether they meant to or not.


And that’s just the start.


So, without further ado, here’s everything you need to know about the Construction Industry Scheme and how it works.



The Overview Thing

If you’ve been an adult for more than 9 and a 1/2 minutes, you’ll know life is complicated. And the construction industry is no different. If anything, it’s even more riddled with complexities. It’s like hanging out with complexities on steroids - such as the CIS thing.


It’s one of the most complex areas of the construction business to negotiate. Period. Essentially, if you’re a contractor, you need to determine the status of the lads (and girls) you pay to carry out any work for you, which we all know can be more challenging than your first Rubiks Cube. Are they are a subcontractor? Or should they really be thought of as an employee? And why is this so important?


Well, it’s important because the CIS doesn’t apply to everyone, like the *staff employed by your company (*employee tax is deducted under ye olde PAYE scheme).


The CIS & Contractors Thing

There’s a pretty big area of greyness that has led to a lot of misunderstanding about whose considered a contractor in the eyes of the CIS, so here’s what you need to know: if you give money to subcontractors to complete any construction work on your behalf, or you spend an average of more than £1 million a year on construction over any given period of three years, the CIS is gonna look at you and say, “Hey, Mister Contractor Man, how are your tax payments going?


Don’t panic, though. This shouldn’t cause much in the way of a headache. It just means you need to “verify” any subcontractors you pay and make sure they’ve registered with HMRC — something that can be done on the internet. If they have registered with CIS, simply give them a pat on the back and then deduct tax at a rate of 20%. If they haven’t registered with HMRC, hold back on said back-pat and deduct tax at 30% instead. See. We told you it was simple.


The Keeping Track Thing

Okay, we’re gonna get real for a moment: trying to keep track of your payments and tax deductions and whatnot is a real migraine-maker (which is why we recommend you give us a call and let us take all that stress away like a tasty after-work pint). And the reason it’s a real pain in the youknowwhere is because you need to keep records of everything (and then remember where you’ve kept those records).


These things you need to keep track of are...

1. The gross amount you’ve paid each of your subcontractors

2. The amount of tax you’ve deducted

3. The cost of the materials

4. And the verification numbers of your subcontractors

5. (Oh, and you’ll also want to give your subcontractor a written statement saying you’ve deducted tax under the CIS)



The Three Tests Thing

You know how we said this CIS thing was a bit complex? Well, we meant it. And here’s one of the most perfect examples ever: every so often, you will use a subcontractor that has successfully applied for ‘gross payment’ status. This means you won’t need to deduct any tax from their pay because they’re going to deal with their own tax payments come the end of the tax year. Easy, right? Wrong. For these guys (and girls) to receive no-tax-deducted-payments, they need to pass three tests. Are you ready?


1. The Business Test: The construction work is based in the UK, and the business was run using a bank account.

2. The Turnover Test: The individual subcontractor’s annual turnover is at least £30K, and that’s only if they’re a sole trader. If they’re part of a partnership, or they are a company, there will be a higher minimum requirement.

3. The Compliance Test: To pass the final “gross payment” test, the subcontractor needs to have been organised, by which we mean they need to have no outstanding tax returns and they don’t owe HMRC any money.


And this isn’t just a one-off thing. For a subcontractor to receive gross payments for their work, they need to pass these three tests each and every year.


The Subcontractor Requirements Thing

Okay, so there is nothing to say you have to be part of the CIS as a subcontractor. Nothing. Nada. Zilch. It’s just not a mandatory thing. However, if you do register - BOOM - there’s a nice chunk of tax savings to be enjoyed. The only compromise if you do register is: you must keep proper records of everything so that you can fill in an uber-accurate tax return, including things like the direct cost of your materials (once again, that’s something the Accounts Done team can do for you, just bell us).


And then there are the other hoops to jump through, like providing your contractor with correct information so that your status can be verified. If you don’t, you could wake up to a letter asking for a £3,000 fine for lying about it, and then receive a dollop of other penalties for not providing the appropriate records when required to (seriously, call us!)


The Potential CIS Issues Thing

We touched on the big grey area of working out who’s an employee and who’s self-employed at the beginning of this article-thingy, but we’re going to mention it again because it’s proper important when applying for the CIS. Get it wrong, make your payments late, or do anything like that and you could be slapped with a £100 fine, and that would just be annoying.


Thankfully, we have experience in exactly this area. It’s one of our world-famous expertise (excuse the exaggeration). So, if you’re in the construction industry but aren’t 100% sure whether to register for the scheme - or you just want a friendly chinwag to learn a little more about what you need to be doing - ping us an email and we’ll clear that muddled mind of yours. Sure, it probably won’t be the most exciting email you’ve ever sent or received, but it might be the most helpful, law-abiding and money-saving email, and that’s got to be worth some sort of kudos point, right?



Thanks for reading! For more bookkeeping-slash-accountancy-slash-finance advice, and a few weird-thoughts, please do follow us on Facebook and LinkedIn and then tell all your businessy friends to do the same.



We're going to say something that you're (probably) thinking -- "God, there are days where drinking on the job sounds appetising." Not all the time. Just some of the time. When the stress-o-metre is about to explode like an over-inflated balloon. Those kind of days. The problem is, drinking on the job is frowned upon if you're not a) Don Draper, b) Charles Bukowski or c) a 40-year-old entrepreneur that works from home. We mean, you could crack open a bottle and enjoy a tipple at work, but you'll probably find yourself updating your CV pretty soon afterward (and that's the sort of tedious task no one wants to do). Sigh. The reality is, all of us responsible adults have to wait until we've clocked off and left the office vicinity before we can enjoy a craft beer... or two... followed by half a bottle of Jack Daniels.


But you're not a responsible adult, are you? And we know that because, well, you're reading this blog post. That means a little part of you wants a job where you can drink during office hours. Cue some great news. We've found those kind of jobs. And they don't just let you sip on the good stuff, some actively promote it. Can we get a "HELL YEAH!"



Brew-Heroes

We're not sure what their official title is (brewer? Master of the brew? Brew-maker? Brewing badass?), all we know is: they brew beer. And to do that well you've got to taste what you're brewing, right? Okay, so you can't get soooo drunk that you think adding tabasco to the recipe would be a good idea, but you can be the guy who created a beer that became soooo cool bearded-hipsters in Shoreditch began drinking it (probably out of copper mugs or something).


Sommelier

If you're not sure what a suh-mel-yay does, they get paid to describe how a wine tastes. Professionally. And, unless you're born with the gift of good luck, you've kinda got to drink said wine to be any good at this job. Actually, you've got to drink loads and loads of wine to be good at this job. Admittedly, most suh-mel-yays have a spit bucket by their feet, but we've done some research and we're pretty sure that's an optional extra.


Food Critic

As if being a food critic wasn't awesome enough already, you're definitely getting to pair your vegan steak with an expensive bottle of vino (NB: we know vegan steaks aren't a real thing... yet). It would just be wrong to chow down on a delicious plate of grub made by a culinary genius and only have a glass of lemon water to enjoy it with. Not that the restaurant owner would allow that. They want a good review and, apart from flying and driving, there's no scenario where booze doesn't make something better.


Author

We should probably confirm not all authors drink. But all the best ones definitely do. Ian Fleming definitely did (#VesperMartini). Hunter S. Thompson never stopped drinking. Truman Capote basically had vodka and orange on tap. Oscar Wilde had a serious thing for Champagne. And Charles Bukowski, well, what do we say -- he was a big fan of all kinds of hooch. Whether that's the common denominator thank links their genius, we can't say. But to disagree would mean it's a coincidence and, come on, that's unlikely.


Bartender

We interviewed a bartender recently (okay, we went to a bar and chatted to a barman while waiting for the rest of our party to show up) and it turns out there are a lot of bars that don't allow their staff to drink the stock, which makes a lot of sense. But there are some bars where you can. Usually that only happens if you own the bar, know the owner really well, know the CCTV blind spots, or work in a really-forward thinking bar. But that's fine. It just means you need to find one of these bars. Schimples.


PR Person

In order to be a good PR person (*that's definitely not their official title), you need to be awesome with people. It's as simple as that. You need to be polite and charming and enthusiastic and buzzing. And then there's the whole social side of things with the events and parties and schmoozing. Ergo, you will be having a few drinks about five times a week.


Travel Writer

Being a travel-writer means travelling the world, stopping off in different far-flung hotspots, and then writing down your experiences so that your readers know just how to make their vacation the best one ever. Of course, going on vacay means getting loose so, yeah, there's a lot of "researching" beach bars, signature cocktails, local nightclubs, and which restaurants have the best wine list to accompany their food menu. It's like the best kind of drinking on the job.


Rockstar

There's no scenario where a rockstar isn't allowed to drink. They can do it on stage. In their music videos. After a gig. Before a gig. While being interviewed. During businessy meetings. In the back of their chauffeur-driven cars. It's non-stop. And if anyone did have the audacity to say, "ahem, could you possibly not do that..." They would find themselves on the receiving end of a mega-meltdown, then get fired by their boss, and then watch on as the rockstar walks away... totally unscathed... and still drinking absinthe.



Thanks for reading! For more bookkeeping-slash-accountancy-slash-finance advice, and a few weird-thoughts, please do follow us on Facebook and LinkedIn and then tell all your businessy friends to do the same.



We get how it looks. It looks like the world loves nothing more than a story that centres around a scrappy, scruffy and super-young founder showing the rich-wrinklies how it’s done, like Mark Zuckerberg and Matt Mullenweg and Catherine Cook. For those that aren't quite 12 and ½ years old, these kid-billionaires are the most inspiring things since Michael Jordan. They’re proof that “age is nothing but a number”.


But what if your face is already covered in life-lines and you feel stuck (usually reading dad jokes as a way of forgetting you feel stuck)?


All around you, everyone seems to be enjoying flourishing careers, attacking life at the top of their game and hustling like crazy -- and yet you’re grinding every day (learning about the latest employment laws), not getting the results you were hoping for. It sucks. And what sucks even more than that sucky feeling is you think you’re too old to hit it big. You might even think it’s already too late to start. Thanks a lot, Zuckerberg.


But what can you do except a) call it a day, b) quit while you’re behind, c) go with the flow or d) let life sail on its own?


Well, what if we said we've found e) a different option? One that’s crazy inspiring. One that’s full of living proof that it’s never too late to dream big and prosper.


That’s right. Forget about those spotty billionaires that managed to luck-out early doors because that’s a pretty warped view of success. As it turns out, three-quarters of all new entrepreneurs in 2017 were between the ages of 35 and 64, with most of them 45 or older. This means there’s a rich history of successful entrepreneurs that didn’t get into the game until they had plonked 40 candles into the cake. And these aren’t people that have just made money and retired. These are people that have changed the way we live our lives.


So, if you’re worrying about your age and lack of perceived success so far -- stop! Failure is just you warming up for the big game -- and these 9 awesome people are proof of that. Enjoy.




Thanks for reading! For more bookkeeping-slash-accountancy-slash-finance advice, and a few weird-thoughts, please do follow us on Facebook and LinkedIn and then tell all your businessy friends to do the same.


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