By Debbie Franklin, Director of Tax and property tax specialist
HMRC has recently made a significant change as to when a property business falls within the scope of CIS as a mainstream contractor.
This is in relation to the business being considered a property investor or a property developer.
A property investment business acquires and sells buildings for capital gains or uses them for rental income.
However, a property investment business can shift from being a 'property investor' to a 'property developer' if it undertakes multiple or significant construction projects for developing one or more properties.
If the business's activities include constructing an entirely new property or redeveloping an existing one, changing its use, then those activities will be considered property development. In this case, the business will fall under the scope of the CIS as a mainstream contractor.
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