CISR12050 - The Scheme: contractors: ‘deemed’ contractors

Under the Scheme, some businesses, public bodies and other concerns are deemed to be contractors.

Sections FA04 /s59(1)(b) - (l) define those persons or bodies ‘deemed’ to be contractors within CIS and include the following

  • businesses which do not include construction operations but which spend above a certain amount on construction operations.
  • public bodies and other specified bodies which spend above a certain amount on construction operations.

Businesses

Only businesses are ’deemed’ to be contractors by FA04/s.59(1)(l). These will be non-construction businesses, such as large manufacturing concerns, department stores, breweries, banks, oil companies and property investors.

The amount these businesses must spend on construction operations, to be considered deemed contractors, is set out at FA04/s59 (1) ‘ in any rolling one year period, the person’s expenditure on construction operations exceeds £3,000,000’.

In addition the following types of business will also fall within the deemed contractor definition (FA04/s59(1)(b));

  • Utilities (gas, electricity, water etc.)
  • Telecommunications
  • Transport network & infrastructure

The above is intended to be helpful. It is not, and should not be read as, an exhaustive list.

Public bodies

FA04/s59 (1) explicitly lists certain bodies and classes of body that are deemed to be contractors where they spend over a certain amount on construction operations.

They are

  • any public office or department of the Crown (including any Northern Ireland department and any part of the Scottish Administration)
  • the Corporate Officer of the House of Lords, the Corporate Officer of the House of Commons and the Scottish Parliamentary Body
  • any local authority
  • any development corporation or new town commission
  • the Commission for the New Towns
  • the Secretary of State if the contract is made by him under Section 89 of the Housing Associations Act 1985
  • the Housing Corporation, a housing association, a housing trust, Scottish Homes and the Northern Ireland Housing Executive
  • any NHS trust or Health and Social Services (HSS) trusts (but not including any NHS Foundation Trust)

The amount these bodies must spend on construction operations to be considered deemed contractors is set out at FA04/s59 (2). This is an expenditure of £3 million or above in any 12 month rolling period.

Regulation 22

The Scheme does not need to be applied to certain payments made by businesses brought into it by virtue of them spending £3 million or more on construction operations. This exemption to report these payments is described in much more detail at CISR15140 and the legislation is explained at CISR17230. For guidance on where a business seeks to be de-registered because all its payments fall within the terms of this regulation, first see CISR15140 and then CISR12060.