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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: contractors: local authorities

CIS uses the definitions of local authorities set out at ICTA88/s842A.

They include

  • metropolitan, county, borough and district councils
  • police and fire authorities
  • parish, community and local councils.

This list is not exhaustive.

Local authorities are only required to operate CIS if their expenditure on construction operations exceeds the limits described in CISR12050. In practice, most local authorities of any size will exceed those limits. You should note that Local Authorities are not able to make use of the provisions of SI2005/2045 reg 22, known as the ‘Own build’ regulation. This is because Regulation 22 specifically relates to ‘businesses’ of the type described at FA04/s59 (1)(l). (See CISR15140 for more information about Regulation 22).

CIS administration

The CIS system relies on interaction with other HMRC systems for maintenance of its records. The essential requirements for maintenance of a CIS record for a contractor are the existence of

  • a record on the SA or COTAX system
  • a record on the Employer Business Service (EBS) relating to a P(SC) or XP scheme.

Since most local authorities have been operating the previous Schemes for many years there will already be a P(SC) scheme in operation for the authority’s employees and subcontractors. There will also be an EBS reference in existence and this scheme will continue to be managed by the Centralised Employers Team, NICEO.

However, the programme of allocating UTRs when the COTAX and SA systems were set up did not cover local authorities. Special arrangements were made, therefore, to allocate UTRs centrally. This was done by South Wales Area (Service), formerly PD2, which set up SA records for all known local authorities.

If you are now approached in connection with the creation of a new local authority, or the reorganisation of existing local authorities for which the Centralised Employers Team, NICEO manage one or more of the schemes, you should now liaise with the CIS Registration Team, Washington to ensure that the necessary SA records are created and / or ceased and who will then notify the NICEO of the new SA reference to be entered on to the EBS record.