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The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of under-declarations or failures to notify chargeability by subcontractors, many of whom came to work in the UK for relatively short periods without paying any tax.

The scheme operates to withhold tax at source at the point when payments are made to subcontractors in respect of work which is defined as ‘construction operations’, thereby reducing the risk of a subsequent default by the subcontractor. Although, if the subcontractor can prove they have complied with their tax obligations and meet other tests (eg on prescribed level of turnover), they are able to receive payments gross.

The scheme has undergone regular changes since its inception and the current regime came into effect on 6 April 2007.

For a summary of the CIS, see the CIS ― overview guidance note.