FORTHCOMING CHANGES: At Budget 2025, the government announced that it will legislate in Finance Bill 2026 (also known as Finance (No 2) Bill 2024–26) for the introduction of new powers for HMRC to tackle fraud by businesses operating within the CIS. Modelled on the VAT measures that restrict input tax recovery where the supplier knew or should have known that the supply was connected to the fraudulent evasion of VAT, the new CIS measures will: • provide for the immediate cancellation of a business’ gross payment status • make a business liable for lost tax, and • allow a penalty of 30% of the lost tax to be imposed on the business, its directors, and other connected persons where it can be shown that the business knew or should have known that it entered into a transaction connected with the fraudulent evasion of tax. Further, the waiting period to reapply for gross payment status that has been immediately removed will be increased from one year to five years. The government has

FORTHCOMING CHANGES: At Budget 2025, the government announced that it will legislate in Finance Bill 2026 (also known as Finance (No 2) Bill 2024–26) for the introduction of new powers for HMRC to tackle fraud by businesses operating within the CIS. Modelled on the VAT measures that restrict input tax recovery where the supplier knew or should have known that the supply was connected to the fraudulent evasion of VAT, the new CIS measures will: • provide for the immediate cancellation of a business’ gross payment status • make a business liable for lost tax, and • allow a penalty of 30% of the lost tax to be imposed on the business, its directors, and other connected persons where it can be shown that the business knew or should have known that it entered into a transaction connected with the fraudulent evasion of tax. Further, the waiting period to reapply for gross payment status that has been immediately removed will be increased from one year to five years. The government has

Spotting the early symptoms of client insolvency • most importantly, a consultant needs to keep alert to the client's financial status • the consultant should take heed of ongoing rumours about the client's financial position (either in the press or by word of mouth) • look out for official announcements to shareholders/the stock market (for example, profit warnings) • note any surprising or uncommercial omissions from the project made by the employer • keep aware of the employer's non-payment or late payment of the contractor or any other parties, on this project or on other projects being carried out by the employer • clearly, if the employer suspends work on the scheme without any adequate explanation or without commercial rationale, this may be a sign that the employer is unwilling to finance further work • confirm suspicions by carrying out a Dun & Bradstreet search/report, which should disclose, for example, any unsatisfied court judgments against the client Consultant methods of protecting itself in advance There are various ways in which a

Spotting the early symptoms of employer insolvency • most importantly, a contractor needs to keep alert to the employer’s financial status • the contractor should take heed of ongoing rumours about the employer’s financial position (either in the press or by word of mouth) • look out for official announcements to shareholders/the stock market (for example, profit warnings), credit rating downgrades, adverse financial filings at Companies House (eg late accounts or qualified audit opinions) or insurance lapses • note any surprising or uncommercial omissions from the project made by the employer • keep aware of the employer’s non-payment or late payment of other parties on this project, or on other projects being carried out by the employer • clearly, if the employer suspends work on the scheme without any adequate explanation or without commercial rationale, this may be a sign that the employer is unwilling to finance further work • confirm suspicions by carrying out a Dun & Bradstreet search/report, which should disclose, for example, any unsatisfied court judgments against the employer If

This Practice Note is intended to provide advice to employers on how to spot problems with insolvent contractors and how the employer can take steps to protect itself in advance. For details on the steps to take in the event the contractor has become insolvent see: Employer steps to take if contractor becomes insolvent—checklist. Spotting the early symptoms of contractor insolvency • most importantly an employer needs to keep alert to the contractor's financial status • the employer should take heed of ongoing rumours about the contractor's financial position (either in the press or by word of mouth) • look out for official announcements to shareholders/the stock market (for example, profit warnings) • keep aware of non-payment or late payment of sub-contractors by the contractor • note any late or partial commitment to key supply contracts by the contractor • be aware of any redundancies or inexplicable removal of personnel from the project by the contractor • removal of materials or plant from the site • any reduced resourcing by the contractor on site • note

This Practice Note is intended to provide advice to sub-contractors on how to spot problems with insolvent contractors and how the sub-contractor can take steps to protect itself in advance. In the event that the main contractor has become insolvent, see Checklist: Sub-contractor steps to take if contractor becomes insolvent—checklist. Spotting the early symptoms of contractor insolvency • most importantly, sub-contractors need to keep alert to the contractor’s financial status • the sub-contractor should take heed of ongoing rumours about the contractor’s financial position (either in the press or by word of mouth) • look out for official announcements to shareholders/the stock market (for example, profit warnings) • keep aware of non-payment or late payment of other sub-contractors by the contractor • note any late or partial commitment to key supply contracts by the contractor • be aware of any redundancies or inexplicable removal of personnel from the project by the contractor • removal of materials or plant from the site • any reduced resourcing by the contractor on site • note any constant

This Practice Note considers the Third Parties (Rights Against Insurers) Act 2010 (TP(RAI)A 2010) and the Third Parties (Rights Against Insurers) Act 1930 (TP(RAI)A 1930), which may assist a party to a construction contract to make a claim against another party’s insurer directly, where the defaulting party has become insolvent. It refers to claims made by an employer against a contractor/consultant, but the same principles apply equally to claims made by other parties involved in a construction project (and parties to any other sort of contract). Common law position At common law it is not possible for a third party to claim directly against another party's insurer. An insurance contract is personal between the policyholder and the insurer, for example a consultant's professional indemnity (PI) policy is personal between the consultant and its insurer. In the event of a claim, at common law the employer cannot claim directly under the PI policy against the consultant's insurer—the employer would have to prove its claim against the consultant, and then the consultant would be indemnified

Work in or adjacent to other buildings A contract for insurance may cover damage to property caused by an insured risk, for example buildings insurance or contractor’s all risk insurance. The insured risk may be an act of God, or it may be caused by negligence. Alternatively, an insurance policy will cover liabilities incurred in law, for example causing injury, death or damage to property by negligence. The insured event must be something which creates a liability in law, ie a tort. Public liability policies do not cover accidental damage, unless negligence is present. Public liability policies also commonly exclude liabilities undertaken under contract which would not have existed absent the contract. In order to insure a building, the person taking out the insurance must have an insurable interest in the property. Generally the insurable interest is ownership of the building or, in the case of a mortgagee, a financial interest in the building. For more information, see Practice Note: General principles of insurance contract law. In the case of a contractor, its insurable

On any construction project a number of insurance policies will need to be taken out and maintained by the parties involved. This checklist looks at the typical insurance policies that will be required, and which party will usually be responsible for taking them out. • All risks—Most standard form building contracts require all risks insurance (often referred to as contractor's all risks or CAR cover) to be taken out to cover physical damage and/or loss of the works, which will include materials. See Contractors’ All Risks (CAR) Insurance. It will often be the contractor's responsibility to take out this insurance (eg insurance Option A for new builds in the JCT contracts), but can also be taken out by the employer (eg insurance Option B where there is construction of new builds and Option C where there is construction to existing buildings) in the JCT contracts (see Practice Note: JCT contracts—insurance). All risks cover is usually taken out in the joint names of the employer and the contractor. A funder or other interested party may also require

ARCHIVED: This Practice Note has been archived and is not maintained. The Construction law case tracker is a list of key judgments from 2021, 2022 and 2023 considered relevant to construction lawyers, with cases listed in reverse chronological order. For previous years, see the 2020, 2019, 2018, 2017, 2016 and 2015 archives. Public procurement cases are listed in the UK public procurement case tracker and the EU public procurement case tracker. Key upcoming appeal cases are listed in the Construction horizon scanner (Appeal cases). Judgment date Case Topic News Analysis Summary 15 December 2023 Jenni Glover & Littleton Glover v Fluid Structural Engineers and Technical Designers Ltd [2023] EWHC 3219 (TCC) Consultant appointmentsPayment Court considers engineers’ scope of duty and liability to repay fees (Glover v Fluid Structural Engineers) The TCC refused to strike out a claim against a structural engineer for wasted costs and repayment of fees. The court was required to consider complex points concerning professionals’ scope of duty, and the circumstances in which a party may claim repayment of

Construction analysis: In this article, we look back on the key developments in construction law that emerged in the first half of 2025, and look ahead to what may come in the remainder of the year.

Construction analysis: In this article, we look back on the key developments in construction law that emerged in the later months 2024, and look ahead to what may come in 2025.