Q&As

How does the Construction Industry Scheme apply to contract administration, and what duties are owed by the contract administrator to the employer in respect of the scheme under JCT?

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Published on LexisPSL on 13/01/2017

The following Construction Q&A provides comprehensive and up to date legal information covering:

  • How does the Construction Industry Scheme apply to contract administration, and what duties are owed by the contract administrator to the employer in respect of the scheme under JCT?
  • Obligations under the CIS
  • Duties owed to the employer

We have assumed in this Q&A that the employer under the JCT Standard Building Contract 2011 and 2016 (SBC) is a ‘contractor’ for the purposes of the Construction Industry Scheme (CIS). This should be specified in the Contract Particulars against the reference to the Fourth Recital and clause 4.6 of the SBC 2016 (clause 4.7 in the 2011 edition). However, even if the parties fail to state this, or if the employer’s status changes such that it comes within the definition of a contractor under CIS only after the contract has been signed, the parties will still be subject to the obligations of CIS. For guidance on when an employer is classed as a ‘contractor’, see Practice Note: The construction industry scheme—when does it apply?—Contractors.

Obligations under the CIS

The obligations imposed by the CIS on contractors (including an employer that falls within this definition under the CIS) are considered in Practice Note: Construction industry scheme—contractors' obligations, and include:

  1. Registering as a contractor with HMRC

  2. Verifying employment status of sub-contractors

  3. Verifying payment status of sub-contractors

  4. Deducting tax from contract payments

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