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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: payments: definition


CISR15600 Action guide contents

A payment is anything paid out by a contractor and includes cash, cheque or credit. An advance, ‘sub’ or a loan is a credit and therefore a payment. This applies whether or not the payment is made directly to the subcontractor (for information about payments made to someone other than the subcontractor, see the separate information panel on ‘Nominees’ inthis section).

The term ‘payment’ includes

  • a payment on account
  • a progress or stage payment
  • a retention payment (for more information see the separate information panel in this section)

The Scheme only applies to payments actually made by the contractor. If a payment thatis due to the subcontractor is withheld, the Scheme does not apply to that payment.

Date of payment

The scheme applies when a payment is made. See FA04/S61 (1) concerning deductions that begins ‘On making a [contract] payment’ and FA04/SS60 (4) about persons who are excepted from deduction provided they are ‘registered for gross payment when the payment is made’.

A payment is made when it is in the control of the subcontractor. In the case of payment by cheque the date of payment is the date the cheque was issued. This may be when the cheque is handed over or sent to the subcontractor. Where the cheque is issued towards the end of the tax month any payment and deduction statement that the contractor is required to give to the subcontractor should show that tax month and not the next tax month even though that is when the cheque may be received.

The question of the date of payment should not normally be an issue. If you experience difficulties where a significant tax loss may result, for example, where a large payment will fall into a later accounting period, you should seek the advice of the CIS AdvisoryTeam (See CISR97030).