The Construction Industry Scheme (CIS) is set in place for contractors to deduct money from the subcontractor’s payment for it to then be delegated to HM Revenue and Customs (HMRC).
The deductions act as an advanced payment method, to contribute towards the National Insurance and Tax. While contractors must register for the scheme, it is optional for the subcontractors however, deductions will be increased in size if they decide against registration.
To register as a contractor, it is necessary that you are paying subcontractors for construction work. Also, it is also important that your business does not operate in construction however, you must spend an average of £1 million on construction every year, across any 3-year period.
To qualify as a subcontractor, you must take part in construction work for a contractor. If you fall under both categories, it is essential that you apply to both.