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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: overview: what about employees?

The Scheme applies to workers who, for particular contracts, are self-employed and are not employees subject to PAYE. Employment status depends on general law. Although the contractor may seek your advice or that of the Department for Work and Pensions (DWP) it is for the contractor to decide this when engaging the subcontractor. The fact that the subcontractor is already registered for CIS, for either gross or net payment, is irrelevant in deciding the issue. It is the terms of the particular engagement which matter in reaching a decision as to whether or not payments are to be treated as caught by the Scheme or subject to PAYE.

The Scheme applies only where there is a contract between a contractor and a subcontractor that is not a contract of employment. Where a contract of employment exists, the subcontractor is an employee and will continue to be liable to tax on employment income through the PAYE system.

Contractor enquiries on statusWhen giving advice to contractors on the operation of the Scheme the question of whether an individual is an employee of the contractor should not be overlooked.

You should initially refer the contractor to the HMRC factsheet ES/FS1 ‘Are your workers employed or self employed for Tax and National Insurance contributions’, available on SEES. More detailed advice for contractors is also available at .