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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
, see all updates

The Scheme: subcontractors: local authorities and other public bodies as subcontractors

Local Authorities and many public bodies are deemed to be contractors where they spend over a certain amount on construction operations (See CISR12050 for more about ‘deemed contractors’).

Local Authorities and the following public bodies are also subcontractors when carrying out construction operations. Although they will not be formally registered on CIS, they are to be regarded as holding gross payment status. The deduction scheme should not be applied, and no deductions should be made from payments to them.

  • Port of London Authority
  • Port of Tyne Authority
  • Commission for the New Towns
  • UK Atomic Energy Authority
  • Welsh Development Agency
  • Scottish Enterprise
  • Registered Housing Associations and Societies
  • British Broadcasting Corporation
  • Government Departments and Executive Agencies
  • Environment Agency
  • British Waterways Board (up to 2 July 2012)
  • Scottish Canals
  • Transport for London
  • Health Service bodies and NHS Trusts
  • Olympic Development Authority (ODA)
  • London Legacy Development Corporation (LLDC)

Where a local authority sets up a Direct Labour Organisation (DLO) or Direct Service Organisation (DSO) to carry out construction operations, and the organisation remains part of the local authority, it is covered by the exemption described above which applies to local authorities. It may be treated as holding gross payment status. Where, however, a DLO or DSO incorporates it becomes a separate company liable to Corporation Tax even if wholly controlled by the local authority. Such a company must apply for registration to be paid gross or net to receive payments falling within the scope of the Scheme.

If a public body or utility is privatised, it is then just like any other private business and must be registered on CIS to enable it to receive payments under the Scheme.