CIS

Candidates employed under the CIS (construction industry scheme) are essentially self employed but when working for a contractor they have 20% tax deducted at source. Contractors can also be deducted 30% whilst the HMRC register their UTR (Unique Tax Reference) or if they are unable to verify the percentage of tax a contractor should be paying.

Their final tax bill will take into account expenses, tool hire / purchase, travel etc and will be dealt with by either the Payroll Company, the contractor is using or by an accountant who will complete their tax return.

The Inland Revenue have stated that recruitment agencies are not allowed to employ individuals on a self employed basis and cannot therefore pay individuals gross without deductions. A contractor can only be paid by this method if the CIS or UTR number that they hold is in the name of a Limited company.

To be deemed 'self employed' by the Inland Revenue they have to fulfil a number of criteria including the following:

- CONTROL: They have to be under our control and supervision and clearly they are not

 - THE RIGHT TO APPOINT A SUBSTITUTE: They should have the right to be able to provide a substitute in their place - clearly they cannot do this as it is this individual that we are providing the contract to.

 - FINANCIAL RISK: They must work to a fixed price and potentially make a loss on the project. Our contractors are paid on an hourly rate and cannot therefore lose money on one of our assignments.

 - PROVISION OF EQUIPMENT: The majority of our contractors do not supply their own equipment or tools, many of them utilise the tools, plant and machinery of our clients.

Given that most agency workers do not fulfil the above criteria, they are not deemed to be self employed and therefore cannot work through Bromak on their own CIS card.

CIS Payroll Companies

Due to the fact that CIS card holders are unable to work directly through an agency, the payroll Provider has to set up CIS divisions allowing CIS card holders to work through themselves as a self employed sub-contractor.

Essentially this is the same to us as using a payroll company; the candidate invoice Bromak gross for the hours worked times their hourly rate on behalf of the contractor.

The payroll company deduct the 20% tax for the contractor and fill in the required paperwork for the Inland Revenue and often complete their tax returns at the end of the year also.

The CIS card holder will pay the payroll company a fixed fee calculated according to the candidates’ hourly rate but typically £10 - £20 per week.