Does CIS Apply to Haulage and Tipper Drivers?

The delivery of materials is not a construction operation. A haulier taking aggregate, blocks or steel to a site, tipping it and leaving is generally making a supply of transport rather than carrying out construction work, and CIS should not apply to that payment.

Where it becomes less clear is when the haulier does something on the site beyond delivering. Work forming part of the site operations themselves can fall within the scheme, and the fact that it is done by a vehicle rather than by hand does not take it out.

The contractor deducts when it should not

Twenty or thirty per cent comes off your invoice and sits with HMRC against your record. It is recoverable through your return or your company's PAYE scheme, but it is your cash flow that funds it in the meantime, and for a haulier funding diesel that is a real problem.

The contractor does not deduct when it should

The obligation sits with the contractor, and so does the exposure, but a dispute over a mixed contract can land on the subcontractor commercially even where the tax position is the contractor's problem.

Nobody verifies

A contractor is required to verify a subcontractor before paying. Where that has not happened, the higher deduction rate can apply, which is an expensive way to discover the arrangement was never set up properly.

A contract that includes both delivery and site work is where most disputes sit. The treatment depends on what the contract is for rather than on the proportions, and a contract that is genuinely for construction operations can bring the whole payment into the scheme, including elements that would be outside it on their own.

This is worth getting advice on before signing rather than after, particularly for tipper operators whose work moves between delivery and groundworks depending on the job.

• Register with HMRC as a subcontractor, because the deduction rate for unregistered subcontractors is higher.
• Check every payment and deduction statement against your invoice, and chase the ones that do not arrive.
• Keep the statements. They are the evidence for recovering the deductions.
• As a sole trader, the deductions are set against your Self Assessment liability. As a company, they are reclaimed through the company's PAYE scheme, which is a different process and a common source of delay.
• Where you also engage other hauliers on construction operations, you may be a contractor as well as a subcontractor, with your own obligations to verify and deduct.