CISR14049 - The Scheme: appendix to Regulation 20A

Examples

Work on the property occupied by the tenant 

1. A landlord owns a vacant commercial building containing a residential flat. They agree with a prospective tenant that provided they lease the building and the flat for the next 5 years, the landlord will pay them towards the cost of making internal structural alterations to the building necessary for installing specific fixtures and fittings to meet their needs.  Provided those payments are for works intended for the primary benefit and use of that tenant they will not be a contract payment for CIS purposes.   If the construction work includes work to make the property structurally sound, such as replacing significant parts of the roof or replacing damaged windows, Regulation 20A would not apply to the payment.  

2. A landlord and tenant agree to vary an existing lease and the landlord agrees to fund the installation of new interior walls and new floor boxes to meet the tenant’s business needs, will qualify under reg 20A, provided the other conditions of Reg 20A are met. 

Work on common areas 

3. A landlord agrees to pay a new tenant, the costs of fitting out an office building to meet their needs. This includes installing specialist plant (air conditioning units and servers) in the building’s plant room that requiring some structural changes, new signage the installation of a separate reception area and security gates, refurbishment of toilets used exclusively by the tenant and additional lockers and bike racks in the basement this payment would qualify under Regulation 20A, provided the other conditions are met. 

Sub-tenants 

4. A company agrees a lease with the owner of a building that permits the property to be sub-let. The head tenant intends to sub-let parts of the property. The owner agrees to pay the head tenant for the fit out works for the head tenant and the sub-tenants. The head tenant enters into a contract with a third person to do this work. The construction work is primarily for the benefit and use of the head tenant and the sub-tenants occupying the property under the head lease. This payment would qualify under Regulation 20A, provided the other conditions are met. 

However, if the head tenant undertakes the construction work on the parts of the property it does not occupy the payment would not qualify under regulation 20A as they do not occupy that part of the property and there is not a contract in place for the work.