CISR14070 - The Scheme: construction operations: territorial limits
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FA04/S74 defines work that is subject to the Construction Industry Scheme in terms of both its type and the location at which it is carried out.
The Construction Industry Scheme does not apply to construction operations carried on outside the United Kingdom (FA04/S74 (1)(b)). ‘United Kingdom’ means Great Britain and Northern Ireland and includes the territorial waters of the United Kingdom which, for the purposes of the Scheme, should be regarded as extending only 12 nautical miles from the high watermark. It does not include the Irish Republic, the Isle of Man or the Channel Islands.
Note that where construction operations are carried out partly within UK territorial waters and partly outside under a single contract, all payments made under that contract are considered to be subject to the Scheme. This is relevant, for instance, where a pipeline is constructed from an offshore rig outside territorial waters to a UK onshore terminal.
It follows that where a UK-based construction concern secures a contract to carry out an overseas project, it should not operate CIS for subcontractors engaged to carry out the work whether recruited in the UK or elsewhere.
Overseas projects
If the UK concern is providing labour for an overseas project rather than carrying out work specified in physical terms, the concern may be acting as a labour agency subject to ITEAPA03/s44. In that case the concern may be liable to operate PAYE for workers sent overseas (See CISR13050 for more details on labour agencies).
On the other hand, an overseas concern that secures a contract to carry out construction work in the United Kingdom for a contractor is subject to CIS as a subcontractor. The overseas concern is also liable to operate CIS as a contractor in their own right if they engage subcontractors for parts of the work (see CISR72650).