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Insight · Tax and CIS

What counts as construction
work under CIS.

The included list is wider than most firms assume and the excluded list catches out exactly the trades that read it. Plus the mixed contract rule, which decides more cases than either list.

Published ·5 min read·Written by Unibuild

CIS covers construction operations on buildings, structures and works forming part of the land, including installation of building systems, internal cleaning during construction, painting and decorating, and preparatory work such as site clearance and scaffolding. Several activities are excluded when supplied on their own. Where a contract covers both, the whole contract falls within the scheme.

Start with the mixed contract rule

Most articles on this subject give you two lists and leave you to it. The rule that decides more real cases than either list is the one about contracts that contain both.

Where a single contract covers operations that are inside the scheme and operations that are outside it, the whole contract is within the scheme. The excluded items do not come out.

Which means the exclusion list is far less useful than it looks. A firm reads it, finds its activity there, and concludes it is outside CIS. But the question is not what activity you are performing. It is what the contract you are performing it under covers.

The exclusions apply to operations supplied on their own. Bundled into a contract that also covers included work, they come along with it.

This bites hardest on exactly the firms this site is written for. A maintenance contract with a works element. An M&E package that includes design and installation. An FM contract covering cleaning and reactive repairs. In each case there is a plausible reading in which part of it is excluded, and a contract that is nevertheless caught in full.

What is inside

Broadly, operations on buildings, structures and works forming part of the land. The shape of it:

  • Construction, alteration, repair, extension, demolition and dismantling of buildings and structures, whether permanent or temporary.
  • Works forming part of the land: roads, railways, docks and harbours, pipelines, reservoirs, sewers, industrial plant, power lines and similar.
  • Installation of systems in a building or structure: heating, lighting, air conditioning, ventilation, power supply, drainage, sanitation, water supply and fire protection.
  • Internal cleaning of buildings carried out in the course of construction, alteration, repair, extension or restoration.
  • Painting and decorating internal or external surfaces.
  • Preparatory and finishing work integral to the above: site clearance, earth-moving, excavation, tunnelling, foundations, scaffolding erection, site restoration and landscaping.

Two things worth noting. Scaffolding erection is inside, which surprises firms who think of it as hire. And demolition is inside, which surprises firms who think of the scheme as being about building things.

What is outside, when supplied on its own

The qualifier at the front of that heading is the whole point, given the mixed contract rule above.

  • Drilling for or extracting oil or natural gas, and extracting minerals.
  • Manufacturing or off-site fabrication of components, materials, plant or machinery, and delivering them to site. Note the boundary: manufacture and delivery are outside, installation is inside.
  • Professional work by architects, surveyors and consultants, and by consultants in building, engineering, decoration or landscaping.
  • Making, installing and repairing artistic works such as sculptures and murals that are wholly artistic in nature.
  • Signwriting, and erecting and installing signboards and advertisements.
  • Installing seating, blinds and shutters.
  • Installing security systems, including burglar alarms, closed circuit television and public address systems.
  • Carpet fitting.
  • Delivering materials, and operations on site that are clearly not construction, such as running a canteen or site facilities.

The professional services exclusion is the one most often misapplied. A designer who only designs is outside. A firm that designs and installs under one contract is looking at a mixed contract, and the answer is not that half of it is excluded.

Who is a contractor, which is a separate question

Scope is one half. The other is whether you are a contractor for CIS purposes at all, and businesses outside construction are caught more often than they expect.

A mainstream contractor is a business whose work is construction and which pays subcontractors for construction operations. Straightforward.

A deemed contractor is a business whose main activity is something else entirely but whose spending on construction operations passes a threshold, at which point it has to operate the scheme on its construction spend like anybody else. Property investors, large retailers, manufacturers and housing associations regularly find themselves here, and the obligations are the same: verify, deduct, file monthly.

Two exceptions worth knowing. Payments by a domestic householder for work on their own home are outside the scheme. And a business paying for construction work on property it uses for its own business, rather than holding or developing it, may be outside even when spending significantly, though that is a distinction to settle with an accountant rather than from a web page.

How to settle it for your own contracts

Three questions, in this order.

  1. What does the contract cover, as a whole? Not the task in front of you. If any part of it is an included operation, work on the basis that the contract is within the scheme.
  2. Are you paying anybody for construction operations under it? If yes, you are operating as a contractor for those payments regardless of what your business does generally.
  3. Is anything genuinely standing alone? A separate contract for a genuinely excluded operation is outside. A line item inside a bigger contract is not a separate contract.

Where a contract is genuinely borderline, the cost of getting it wrong is asymmetric. Failing to operate the scheme when you should have leaves you liable for deductions you did not make. Operating it when you did not strictly need to is an administrative cost and a subcontractor who reclaims the deduction. That asymmetry is worth remembering when the answer is unclear, and the answer for your own contracts is one for your accountant rather than for this page.

Where this touches the platform

Scope is a judgment about a contract and Unibuild does not make it. What it does is hold the contract and its payments together, so the judgment can be applied consistently and evidenced afterwards. Subcontract orders carry their terms as structured fields printed on page one, payments are recorded against the approved invoice with the remittance attached, and the subcontract exposure report totals orders, invoices and payments across the ledger. Where a firm operates a mix of maintenance and works, which is exactly where the mixed contract rule bites, the value is being able to see what each order actually covers rather than inferring it from an invoice description months later.

The CIS deductions guide Subcontractor management For M&E contractors For facilities management

Where to start, on Monday

Take the three contracts you are least sure about and ask one question of each: does any part of this contract cover an included operation. Not the invoice, not the task, the contract.

Then check whether your business is a deemed contractor. If construction is not your main activity but you have been spending on building work, that is a question worth putting to your accountant before HMRC puts it to you, because the liability for deductions not made sits with the payer.

Asked most often

The follow-up questions.

The scheme itself is set out in the CIS deductions guide.

What work is covered by CIS?+
Construction operations on buildings, structures and works forming part of the land: construction, alteration, repair, extension, demolition and dismantling; roads, pipelines, sewers and similar works; installation of heating, lighting, ventilation, power, drainage, water and fire protection systems; internal cleaning during construction; painting and decorating; and preparatory work including site clearance, excavation, foundations, scaffolding erection and landscaping.
What is excluded from CIS?+
When supplied on their own: drilling for oil or gas and extracting minerals; manufacturing or fabricating components and delivering them, though installation is included; professional work by architects, surveyors and consultants; artistic works; signwriting and signboards; installing seating, blinds and shutters; installing security systems including alarms and CCTV; and carpet fitting. The words "on their own" are load-bearing.
What happens if a contract covers both included and excluded work?+
The whole contract falls within the scheme. The excluded operations do not come out of it. This decides more real cases than either list, because firms read the exclusions, find their activity there and conclude they are outside, when the question is what the contract covers rather than what task they are performing.
Is scaffolding covered by CIS?+
Erecting scaffolding is an included operation, as preparatory work integral to construction. That surprises firms who think of scaffolding as hire rather than as construction work. Hire of plant without an operator is treated differently, which is one of several places where the distinction between supplying a thing and doing work with it matters.
What is a deemed contractor?+
A business whose main activity is not construction but whose spending on construction operations passes a threshold, at which point it must operate the scheme on that spend: verify subcontractors, deduct, and file monthly returns. Property investors, large retailers, manufacturers and housing associations regularly fall into this without expecting to.
Does CIS apply to work for a private homeowner?+
No. Payments made by a domestic householder for construction work on their own home are outside the scheme. The obligations arise between businesses in a contractual chain, which is why a subcontractor working directly for a homeowner has no CIS deduction taken while the same trade working for a main contractor does.
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