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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: payments: land purchases


CISR15600 Action guide contents


Most construction contracts simply require the subcontractor to carry out construction operations or provide labour for such work and they may also involve the provision ofmaterials.

Occasionally, however, a contract may require the subcontractor, for example, a developer,to locate and acquire a site for the development, funds for the land purchase being provided by the contractor. If the commitment to purchase land and arrange for construction work arises from a single contract, strictly, all payments made under that contract are subject to a deduction (materials excepted). This is because FA04/S60(1) says that ‘any payment which is made under a construction contract’ is caught, though FA04/s61(1) goes on to exclude materials.

Where a payment made includes an element reimbursing the subcontractor for the purchase ofland on behalf of the contractor, that part of the payment may, be treated as ‘materials’ and is not therefore subject to deduction.