The Scheme: subcontractors: definition of subcontractor
A subcontractor is any business which has agreed to carry out construction operations for another business or body which is a contractor or deemed contractor - whether by doing the operations itself, or by having them done by its own subcontractors or employees, or in any other way. Subcontractors include concerns normally known as main contractors, where they are engaged by a client who is a contractor; for example, a local authority.
The term ‘subcontractor’ includes:
- a company, including any corporate body or public body, as well as any individual self-employed person(s) running a business or partnership
- a labour agency or staff bureau which contracts either to get work done with its own workforce, or to supply workers to a contractor
- a foreign business if the construction operations for which it is being paid take place in the United Kingdom or within United Kingdom territorial waters (up to the 12 mile limit)
- a local authority (and its Direct Service or Labour Organisation) or public body (or its subsidiaries) if they are engaged on construction operations for someone else (see CISR13040 for the list of Public Bodies affected)
- a gang-leader who agrees with a contractor on the work to be done, and in turn receives payment for the work of the gang.
Businesses acting as both subcontractor and contractor
Some businesses may act solely as contractors or as subcontractors but many act as both. This means that they both pay businesses below them and are paid by businesses above them in a chain. So for some of their transactions they will have to follow the rules for contractors and for others the rules for subcontractors. These businesses will be contractors under FA04/s57(2)(b)(i).