GLOSSARY

Construction operations definition

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What does Construction operations mean?

A defined term from the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) which is required to enable adjudication.

In order for a contract to be capable of referral to adjudication it must be work which falls within the definition of "construction operations" as described the HGCRA 1996, s 105.

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What is a construction contract under the HGCRA 1996?

This Practice Note considers when the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) applies. In summary:•the HGCRA 1996 applies to ‘construction contracts’•‘construction contract’ is defined by HGCRA 1996, s 104•a ‘construction contract’ will involve ‘construction operations’ as defined by HGCRA 1996, s 105•a ‘construction contract’ must include certain provisions relating to adjudication and payment•in respect of ‘hybrid’ contracts (ie those relating to both construction operations and other matters), the HGCRA 1996 will only apply in respect of the construction operations•the mandatory provisions do not apply to contracts with residential occupiers•for contracts entered into prior to 1 October 2011, the HGCRA 1996 only applied to contracts which were made in writingSignificance of contract being a construction contractStatutory adjudicationParties only have a mandatory right under HGCRA 1996 to adjudicate if the relevant contract is a 'construction contract' (as defined by HGCRA 1996, s 104).If a contract is a ‘construction contract’, it must contain certain terms relating to the procedure of any such adjudication (HGCRA 1996, ss 108(2) to (4)). Those terms must be in writing. If a ‘construction contract’ does not contain such terms in writing, the provisions of Part I of the Scheme for Construction Contracts will apply (HGCRA 1996, s 108(5)).It should be noted that separate regulations provide

The construction industry scheme—when does it apply?

The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of sub-contractors in the construction industry under-declaring or failing to notify their chargeability to UK tax.Unless the sub-contractor to whom a payment is made is registered for gross payment, the scheme requires a contractor who makes a payment under a construction contract to withhold tax at source at a rate of:•30%, or•if the recipient sub-contractor is registered with HMRC, 20%from so much of the payment as does not represent the cost of materials used in carrying out the construction operations.Imposing the tax at the point of payment reduces the risk of a subsequent default by the sub-contractor. If the sub-contractor can prove he, or if a company, it, has complied with his/its tax obligations he/it can apply to receive payments gross.For more detail on the obligations imposed by the CIS rules, the conditions that must be satisfied for a sub-contractor to be registered for gross payment and what types of payment are exempt from withholding tax imposed by the CIS rules, see Practice Notes:•Construction industry scheme—contractors' obligations•Construction industry scheme—sub-contractors' obligations, and•Construction industry scheme—contract paymentsFor an overview of how the CIS works, see: Construction industry scheme—overview.This Practice Note covers:•the meaning of construction operations, and•to whom the

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Share purchase agreement—pro-buyer—corporate seller—conditional—long form

Share purchase agreement—pro-buyer—corporate seller—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 [Insert name of selling corporate entity] incorporated in [England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Seller); 2 [Insert name of purchasing corporate entity] incorporated in England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Buyer), and 3 [Insert name of guarantor entity] incorporated in England and Wales OR [insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Guarantor) [(each of the Seller, the Buyer and the Guarantor being a Party and together the Seller, the Buyer and the Guarantor are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in [England and Wales OR [insert country of incorporation]]. Details of the Company are set out in Schedule 1. (B) The Seller is the legal and beneficial owner of the Sale Shares (as defined below), being in aggregate the entire allotted and issued share capital of the Company. (C) The Seller has agreed to sell and the Buyer has agreed to purchase the Sale Shares on the terms of this Agreement. (D) The Guarantor has

Share purchase agreement—pro-buyer—individual sellers—conditional—long form

Share purchase agreement—pro-buyer—individual sellers—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 The several persons whose names and addresses are set out in Schedule 1 (together the Sellers), and 2 [Insert name of purchasing corporate entity] incorporated in [England and Wales OR [Insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Buyer), [(each of the Sellers and the Buyer being a Party and together the Sellers and the Buyer are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in[ England and Wales OR [insert country of incorporation]]. Details of the Company are set out in Schedule 2, Part A. (B) The Sellers are the legal and beneficial owners of the Sale Shares (as defined below), being in aggregate the entire allotted and issued share capital of the Company. (C) The Sellers have agreed to sell and the Buyer has agreed to purchase the Sale Shares on the terms of this Agreement. The parties agree: 1 Definitions and interpretation 1.1 In this Agreement[ unless the context otherwise requires]: Accounts • means the audited accounts of[ the Company OR each Group Company and the audited consolidated accounts of the Group] [ for the accounting reference period ended on the Accounts Date OR for each of the last [insert number] consecutive accounting reference

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Does a construction company that provides subcontractors with a van (including all fuel and running costs) for use on their construction projects have any CIS obligations in relation to the provision of the van?

Does a construction company that provides subcontractors with a van (including all fuel and running costs) for use on their construction projects have any CIS obligations in relation to the provision of the van? The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of subcontractors in the construction industry under-declaring or failing to notify their chargeability to UK tax. For further information, see Practice Note: The construction industry scheme—when does it apply? Scope of CIS The obligation to deduct tax imposed by the CIS rules applies only to a contract payment. A ‘contract payment' is defined as: ‘… any payment which is made under a construction contract and is so made by the contractor (see section 57(3)) to— (a) the sub-contractor, (b) a person nominated by the sub-contractor or the contractor, or (c) a person nominated by a person who is a sub-contractor under another such contract relating to all or any of the construction operations.’ Even if a payment falls within

Does the HGCRA 1996 apply to onshore and offshore operation and maintenance agreements?

Does the HGCRA 1996 apply to onshore and offshore operation and maintenance agreements? The Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) only applies to a ‘construction contract’, namely a contract that satisfies all of the requirements set out in HGCRA 1996, ss 104 to 106 (and, for contracts concluded prior to 1 October 2011, HGCRA 1996, s 107). A construction contract is an agreement to carry out ‘construction operations’ or arrange/supply labour for such operations (HGCRA 1996, s 104). The activities which constitute construction operations for the purposes of the act are set out in HGCRA 1996, s 105(1), albeit subject to HGCRA 1996, s 105(2) which lists excluded works that do not amount to construction operations. Where a contract involves both construction operations and non-construction operations (sometimes referred to as a hybrid contract) the HGCRA 1996 will still apply but only to those parts of the contract which are concerned with construction operations. Construction operations If the works in question do not fall within the list in HGCRA 1996, s 105(1), they are not construction operations under the HGCRA 1996; therefore any agreement for them to be carried out will not be covered by the HGCRA 1996. It is important to consider whether the entirety of the works in a contract are captured, for example maintenance work may fall within HGCRA 1996, s 105(1)(a) and (b) but

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NEC X29—A new tool in the construction industry’s fight against climate change?

Construction analysis: Jon Gilbert, knowledge lawyer, and Vanessa Medina, senior associate, both at Freshfields Bruckhaus Deringer discuss the climate change clause (Option X29) recently published for use with the NEC contracts (a suite of standard form construction contracts and consultant appointments which focus on good project management and collaboration).

Major extension of adjudication rights (Abbey v Simply)

Construction analysis: In an important judgment, the Court of Appeal has confirmed that statutory adjudication rights can extend to contracts other than those through which the construction works and services are paid for and performed. The Court of Appeal’s decision provides rare guidance on how section 104(1) of the Housing Grants, Regeneration and Construction Act 1996 (HGCRA 1996) is to be interpreted and the extent to which statutory adjudication applies. This is the first time the Court of Appeal has considered the issue of what is a ‘construction contract’ for adjudication purposes. Written by Barry Hembling (bhembling@wfw.com) of Watson, Farley & Williams LLP, who acted for the successful appellant in this case.

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169 Agreement and terms in writing for construction operations

169 Agreement and terms in writing for construction operationsIn order for the Housing Grants, Construction and Regeneration Act 1996 as amended (‘the Act’) to apply, the construction contract does not need to be in writing or evidenced in writing1. The unamended Act, which did require writing or evidence in writing, will continue to apply to construction contracts made before 1 October 2011, so that the previous law will be relevant to adjudication of disputes arising under such contracts2. Whilst documentary evidence of the contract was sufficient to bring it within the unamended Act, such evidence had to

451 Option to tax—disapplying the option

451 Option to tax—disapplying the optionIn certain circumstances, the option to tax may be disapplied, such that the relevant supplies will not be standard-rated1. In addition to its disapplication in relation to supplies of buildings intended for use as, or for conversion into, a dwelling, relevant residential purposes or relevant charitable purposes (other than as an office), in respect of any grant made to a relevant housing association2, additional anti-avoidance provisions prevent an option to tax being effective in relation to certain supplies by developers where there are arrangements for the property to be occupied by an exempt or

Construction operations is referenced 2 in Encyclopaedia of Forms and Precedents

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212. Collateral contracts and warranties.

212. Collateral contracts and warranties. In the ordinary course of business pre-contract statements1 may be made which may be enforceable, for example, as collateral contracts or warranties2. In the construction industry it is common for special contracts or warranties3 to be made or given to enable a person to pursue a remedy otherwise than through a contractual chain of responsibility because it may not be practicable or possible to do so. For example, nominated sub-contractors are generally required to give undertakings to the employer as to design where a main contractor is or may

Construction operations is referenced 1 in Halsbury's Laws of England

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