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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): what is a contractor / what is a subcontractor?

Under the CIS the terms contractor and subcontractor have special meanings that are much wider than normal.


A contractor is a business or other concern that pays subcontractors for construction work. Contractors may be construction companies and building firms but may also be government departments, local authorities and many other businesses that are normally known in the industry as ‘clients’.

Non-construction businesses or other concerns are counted as contractors if their average expenditure on construction operations over a period of 3 years is £1 million or more. We call these types of business ‘deemed contractors’ (COG909050).

Private householders, and non-construction businesses or other concerns that spend less than an average £1 million per year on construction work are not counted as contractors so are not covered by the Schemes.


A subcontractor is a business (company, partnership or individual) that carries out construction work for a contractor.

Businesses that are Contractors and Subcontractors

Many businesses pay other businesses for construction work, but are, themselves, paid by other businesses too.

When they are working as a contractor they must follow the rules for contractors.

When they are working as a subcontractor they must follow the rules for subcontractors.

Caseworkers must

  • explore all of the systems a business has either as a contractor or subcontractor and
  • address all of the risks.