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CIS Scheme

I have a client that manufactures, supplies and installs fireplaces and some fires.  The installations are in general existing houses not new builds.  They pay a Corgi regsitered fitter on an invoice basis to install the gas fires as and when needed and it is not a full time job to employ someone.  Following on from a PAYE enquiry H M Revenue and Customs say that this labour falls within the CIS scheme and they should have been deducting CIS tax from the invoice.  They want to go back three years with the claim.  Views and comments would be appreciated please.

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By she001
17th Feb 2012 00:12

From HMRC Website

If you are contracted to work in domestic households and you engage subcontractors you are a CIS contractor and will have to operate CIS.

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17th Feb 2012 12:54

Construction operation

According to CIS340, the CIS Guide, the installation of systems of heating, etc., is a construction operation, while the manufacture and delivery of such systems is not.

You cannot argue that the self-employed fitter is not a CIS sub-contractor or that your client is not a CIS contractor.  Perhaps, the fitter may already be registered as a sub-contractor in respect of his work for other firms, in which case the rate of CIS tax should be 20%.  If not, it should be 30%.  There may be scope for claiming relief if the fitter has declared his total income and paid income tax accordingly.

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