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HMRC internal manual

Construction Industry Scheme Reform Manual

From
HM Revenue & Customs
Updated
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The Scheme: subcontractors: labour agencies

A labour agency supplying workers to a contractor is obliged to operate PAYE even though the contract between the agency and the worker is a contract for services (ITEAPA03/s44). This means that circumstances in which an agency has to operate the Construction Industry Scheme in the role of contractor are likely to be rare. The most common circumstance is where the agency engages personal service companies to supply the workers.

Where a worker is supplied to a contractor by or through an agency and the worker carries out construction operations under the terms of a contract they have with the agency, the agency supplying the worker will be a subcontractor as far as the contractor is concerned. In all cases the contractor should apply the Scheme when making payment to the agency. The agency is just like any other private business and should register as a subcontractor to enable it to receive payments under the Scheme either gross or after the standard rate of deduction has been applied.

However where a worker is merely introduced to the contractor by an agency and carries out construction operations under the terms of a contract they have with the contractor, the Scheme does not apply to the agency.

See also CISR14070 where a UK concern is providing labour for an overseas project.