News Column

Most property investors and investment managers...

February 1, 2014

Anil Patel

Most property investors and investment managers do not consider the Construction Industry Scheme as applying to them, because they are not involved in construction directly. This can be a costly mistake as a result of an HM Revenue & Customs enquiry or the outcome of due diligence as part of a proposed sale. What investors and investment managers (acting on behalf of the investors) often do not realise is that the reach of CIS legislation is far wider than just construction businesses. CIS legislation will apply to any person or body that is not a construction business if its expenditure on “construction operations” exceeds £3m in a period of three years. In a recent case, an offshore investor held a sizeable property that it significantly refurbished with a view to a sale. Refurbishment costs, which included additions to the building, were roughly £100m. The due diligence process highlighted that the CIS had not been operated and therefore identified that a potential maximum liability of unpaid tax of roughly £30m could arise. CIS legislation can be complex and confusing and, given the potential significant liabilities that can arise, it should not be ignored. Advice should be sought at the outset, not after the event. Anil Patel is associate director of employment tax at Grant Thornton


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Estates Gazette (UK)


Story Tools