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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): deemed contractors

COG909040 explains that non construction businesses or other concerns can be counted as contractors if their

  • average expenditure on construction operations
  • over a period of 3 years
  • is £1 million or more.

HMRC calls such businesses ‘deemed contractors’.

A deemed contractor has the same obligations to operate the CIS correctly as any other contractor.

However from 06-04-07 a deemed contractor no longer needs to operate CIS on any payments for construction operations that relate to

  • a property used for the purposes of the business of
  • that person or
  • another company in the same group or
  • of another company of which that company owns 50% or more of the shares.

Construction operations on properties that are for sale, to let or held as an investment are not excluded from the operation of CIS regardless of whether the above criteria are met.

The expenditure would still be included in the calculation of construction operations expenditure to determine if the business is a deemed contractor.