In the construction industry, there are many different regulations and requirements that companies must adhere to in order to operate legally. One of these requirements is the Construction Industry Scheme (CIS), which aims to ensure that construction workers are paid correctly and that taxes are paid on time.

One aspect of the CIS that can be confusing for companies is the concept of a deemed contractor. In this article, we will explore what a deemed contractor is and what this means for companies operating within the construction industry.

So, what is a deemed contractor?

A deemed contractor is a company or individual that may not necessarily be a contractor in the traditional sense, but is still subject to the same CIS requirements as contractors. This includes the obligation to register with HMRC, verify subcontractors, and submit CIS returns.

According to HMRC, a company or individual may be deemed a contractor if they meet certain criteria. These criteria include:

– Spending an average of at least £1 million per year on construction over a period of three years

– Being part of a group of companies that meets this spending threshold

– Carrying out construction work that lasts for 30 days or more in a 12-month period

– Carrying out construction work that involves spending an average of more than £1 million per year over a 3-year period

It is important to note that these criteria are not exhaustive, and HMRC may deem a company or individual a contractor based on other factors such as the nature of their work and their relationship with subcontractors.

So, why does being deemed a contractor matter?

As mentioned earlier, being deemed a contractor means that a company or individual must register with HMRC, verify subcontractors, and submit CIS returns. Failure to comply with these requirements can result in penalties and legal action.

Additionally, being deemed a contractor can impact a company’s reputation within the industry. It is important for companies to demonstrate that they are operating legally and ethically in order to attract business and maintain a positive image.

In conclusion, being deemed a contractor is a significant consideration for companies operating within the construction industry. By understanding the criteria for being deemed a contractor and ensuring compliance with CIS requirements, companies can operate legally and maintain their reputation within the industry.