The Construction Industry Scheme?

Question

Can someone please explain to me in laymen's terms the background to the CIS. I have an interview next week and I really need to know.

Answer 1

It was introduced to stop loopholes where tradesman in the construction industry might have avoided paying tax and NI.

If a contractor (i.e. big organisation) spends over £1m on construction on average over a 3 year period they have to ascertain the tax status of the firms / individuals engaged on this work.  The firms / individuals may be registered with the Inland Revenue as paying their own taxes, or having tax deducted from the payments they receive.

The contractor should submit a monthly return to the Inland Revenue declaring who it has paid, and how much tax, if any, has been deducted from the payment made.  Any deductions are paid separately by the contractor to the Inland Revenue.