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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
, see all updates

Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): following the risk

A contractor or subcontractor within the Construction Industry does not operate in isolation.

A contractor is likely to receive work from other businesses within the construction industry (other contractors).

A subcontractor may undertake work for several construction businesses (contractors).

A business can be a contractor when providing work to others and a subcontractor when carrying out work for others.

These links between different businesses within the industry mean that a risk in one business may indicate a likelihood of that risk occurring in another business linked to it.

For example if a subcontractor is using someone else’s identity to work for one contractor it is likely that he is doing the same with other contractors for whom he works. Likewise if a subcontractor is receiving gross payments from a contractor when the payments should be made net it is possible that that contractor is incorrectly making payments gross to other subcontractors engaged by him.

CI Caseworkers must

  • build up a picture of how the contractor / subcontractor operates
  • consider the full extent of any risk - contractor or subcontractor
  • consider whether the risk is likely to occur in other linked businesses and
  • make a referral to RISK where risks are apparent in other businesses.

Examples of how this could arise are attached.

Example 1 (Word 37KB) 

Example 2 (Word 34KB)