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Does this work fall within the CIS?

I've read the HMRC guide but I'm still unsure.

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A letting agency (Company A) arranges the maintenance of landlords’ properties. So for example Company A will arrange for a plumber to fix a leaking tap at a landlord's property. The plumber will invoice the letting agency which in turn will pass on the cost to the landlord, by deducting that invoice from the rents collected.

As the maintenance work has been increasing year on year, the director of Company A has now set up a separate property maintenance company B, which will undertake the maintenance work from now on. So now company B will hire in and pay the tradesmen for various maintenance jobs to landlord’s properties. Company B will then apply a mark-up and invoice company A,  which will pass on the cost to the landlord as before.

So will either or both Company A and Company B have to register for CIS?

Neither company will be involved in site work or large projects. they will only ever be maintaining the properties for landlords when needed. Readers views would be much appreciated, thank you.

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By rmillaree
07th May 2021 11:08

Seems reasonably clear (i could easily be wrong though as i am posting this answer in haste) to me that company B could potentially be brought within the scope of cis - obviously whether cis does apply depenedson the details of the work being carried out and the contracts involved.

Would you not agree that for company A there is no change they are still hiring third party to do the work so whatever the situation was before will still be the same now from that persective?
"Neither company will be involved in site work or large projects. they will only ever be maintaining the properties for landlords when needed. "
Its the same issue as the previous similar thread though there is no exemption for "contractors.subcontractors doing work on residental property" so the fact the work isn't large or isn't site means didly squat - practicably spekaing an individuals home is a site and the size of the house doesnt come into it generally spekaing.
The specific question for company B is the one when they are engaging a subcontractor is the job they have engaged subcontractor for within cis or not ? if it is then unless i have missed something (possible!) i would default to saying cis does apply for that piece of work.

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Replying to rmillaree:
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By VATs-enough
07th May 2021 11:47

Well, I am no CIS expert but have been lucky enough to have had many conversations with someone who is.

Unless I am mistaken, both A and B would have CIS obligations as both are 'contractors' and both are using subcontractors (I.e. B is engaging subbies, A is engaging B).

Of course, this is all subject to the exact nature of the works actually falling within CIS scope.

Will happily stand corrected !

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Replying to VATs-enough:
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By rmillaree
07th May 2021 14:48

"Unless I am mistaken, both A and B would have CIS obligations as both are 'contractors' and both are using subcontractors (I.e. B is engaging subbies, A is engaging B)."
As Dullard has pointed out its probable/possible that A is simply an agent passing on costs that are directed toward the property owners. If thats the case business A shouldnt really have any construction activities as far as cis is concerned.

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Replying to rmillaree:
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By VATs-enough
07th May 2021 20:56

Agree that could be the case, but based on OPs comment that the workmen invoice A not the homeowner, it is entirely possible that A is a contractor, is it not ?

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Replying to VATs-enough:
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By The Dullard
08th May 2021 12:46

Contractor has a much more specific meaning than you appear to think. The definition is a page of legislation, and I would be dubious that A satisfies the definition, even if acting as principal.

And the reality is more likely that they are acting as (disclosed or undisclosed) agent, in any event.

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By The Dullard
07th May 2021 12:31

After a building has been built, works that do not involve any interference with the fabric of the building are not generally considered to be construction operations, subject to:

https://www.gov.uk/government/publications/construction-industry-scheme-...

https://www.gov.uk/government/publications/construction-industry-scheme-...

Your leaking tap example, is clearly covered in the latter extract as not being a construction operation.

Care needs to be taken though, as CIS relates to payments under construction contracts, and construction contracts are contracts between contractors (ticked in relation to B, but not for A, who is acting as agent) and subcontractors (ticked where you have a contractor subcontracting work, by definition) and relating to construction operations.

If B contracts with C to do X, Y and Z and Y is a construction operation, but X and Z are not, you still have a construction contract within the ambit of CIS, as the contract relates to construction operations due to the inclusion of X.

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Replying to The Dullard:
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By rmillaree
07th May 2021 14:34

Excellent post Dullard - i did sort of swerve the issue for A in my initial reponse as i am time limited today but did think along similar lines to you that A might perhaps not be within cis either for the reason you say or they are simply not deemed to a "construction related business" - as you say the key here is that they need to be acting as an agent in that regard so the supply from the subcontractors/B is to the end customer and not to A.

Everything else i would agree with too - its the minor detail of whether what X Y and Z do for B - my recent post on a similar thread gave some specific examples in that regard.

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By Matrix
07th May 2021 15:03

If not within CIS then would B be an employment intermediary?

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