The Construction Industry Scheme (CIS) regime was introduced under the Finance Act 2004 to regulate tax on payments between contractors and subcontractors for construction work.
The regime requires subcontractors to be registered with HMRC in order to receive payments gross (i.e. without deduction of tax). If subcontractors are not registered, contractors are then obliged to make payments net of tax and to account directly to HMRC for the tax due. The point to be aware of is that it is a contractor’s responsibility to check whether a subcontractor is entitled to be paid gross or not.