There are a few activities within the construction industry that are exempt to the CIS, but there are also a number of anomalies. The principle activities that are exempt from the CIS include the professional work of engineers, draughtsmen, scientists and technicians, architects and surveyors, plus consultants in building, engineering, landscaping and interior or exterior design, plus the manufacture or delivery of materials to site, or the transport of spoil away from site. Note that this exclusion applies to all surveyors and architects, even if their role includes supervisory or executive function or responsibility, unless they are acting as a developer, which means they are in CIS!!
For all other professionals the exemption only applies to those whose services are consultative, not executive; so if any one of these other roles is actively engaged in the day to day running of a construction operation the work is in CIS!
In addition, whilst that the following operations are within the scope of the CIS,
‘installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection’
This provision is straightforward but you should note the following points
- only ‘systems’ of a type listed in the subsection above are included. It does not, therefore include other systems that may be found in a building or structure such as, public address, security, IT and so on.
- More importantly, it only applies to installation of these systems, not their repair or maintenance. Neither does it apply to their alteration or extension(s).
- However, the replacement of a system, for example, complete electrical rewiring, amounts to installation!
Here is the definitive extract from HMRC’s CIS reform manual:“Repair of systems”
The legislation regarding building service systems only refers to their installation. Therefore, repairs to any of these systems are outside the scope of CIS. Soldering a leaking pipe or patching a leaking boiler, replacing a defective tap, rewiring a single defective circuit, replacing a burned-out ventilation fan motor, replacing a broken wash basin, fixing a leaking radiator or replacing standard radiator valves with thermostatic valves, are all plainly repairs to a part of the overall building system.
Even where the repaired/replaced item may represent a significant component part of the overall system, such as a central heating boiler, its replacement does not constitute ‘the installation of a system of heating’ and therefore will not fall within CIS.
However, these exemptions only apply if the contract is for repair or maintenance of the excluded systems: if the contract also includes works that are within CIS then the whole of the contract is subject to CIS; for example, a payment under a single contract to repair both a broken gutter (normally excluded) and replace broken roof tiles will all be caught under the scheme. And please note, that splitting the works between two different invoices does not work, because it’s the contract that counts, not the invoice!
In addition, the CIS does not apply if your work is:
paid for by a charity or trust, or paid for by the governing body or head teacher of a maintained school on behalf of the local education authority, or on the subcontractor’s own property and is worth less than £1,000 excluding materials – but you must call the CIS helpline to get an exemption for that!
The following list is taken directly from HMRC’s guide to operations that are exempt from the CIS:
- manufacture or offsite fabrication of components or equipment, materials, plant or machinery and delivery of these to the site – for example:
traditional building materials - prefabricated beams and panels
- ready-mixed concrete
- manufacture and delivery of prefabricated site facilities
- running of site facilities such as canteens, hostels, offices, toilets and medical centres or the supply of security guards
- installation or replacement of telecommunication or computer wiring through pre-existing ducting in buildings
- delivery of road-making materials
- setting out traffic cones
- hire of scaffolding equipment (without labour)
- delivery, repair or maintenance of construction plant or hire equipment without an operator – for example:
concrete mixers, pumps and skips - installation of fire alarms, security systems, including burglar alarms, closed-circuit television as part of a security system, and public address systems, but not any preparatory works on the land such as digging, building/erecting concrete posts on which to install the CCTV
transport of materials from site to site on the public highway
assembly of temporary stages and exhibition stands including lighting
external cleaning (other than painting or decorating) of buildings and structures
drilling for, or extraction of, oil or natural gas
extraction of minerals, boring or construction of underground works for this purpose
manufacture, delivery, repair, servicing or maintenance of these items:
- systems of heating
- lighting
- air-conditioning
- ventilation
- power supply and distribution
- drainage
- sanitation
- water supply and distribution
- fire protection works lifts, plant or machinery needed by the specification of a building under construction or alteration
- replacement of system parts not involving other construction operations (for example, taps or a radiator)
- stairlifts requiring no alteration or repair to the building
- tree planting and felling in the ordinary course of forestry or estate management
- manufacture and delivery of lamp standards – routine maintenance such as cleaning and general replacement
- manufacture offsite and delivery of flooring material
- manufacture and delivery of:
glazing materials - computer and instrumentation systems
- thermal insulation materials
- heating and ventilation systems
- doors and rolling grills
- painting or decorating materials
- manufacture, delivery and installation of seating, blinds and louvered shutters
- manufacture, installation and repair of artistic works (for example sculptures and murals) which are wholly decorative in nature (not functional items caught by the scheme which incidentally have artistic merit)
- manufacture and installation of solar, blackout or anti-shatter film
- signwriting and erecting, installation and repair of signboards and advertisements
- carpet fitting
