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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: payments: small payments arrangement - description


CISR15600 Action guide contents

Under SI2005/2045 reg 18, certain concerns may be authorised not to apply the Scheme to small contracts for construction operations. This depends on approval by the Inspector and the arrangements should only be approved if the following conditions are satisfied:

  • The contractor is a ‘deemed contractor’ as described in CISR12050.
  • The contracts to which the arrangement applies have a value not exceeding £1,000 after deducting the cost of materials.These conditions are described in more detail in the following paragraphs.


Eligible contractorsOnly ‘deemed contractors’ may apply to operate the small payments arrangement (SI2005/2045 reg 18(2)(a)). These are commercial concerns or public bodies classed as contractors by virtue of their expenditure on construction work but which do not carry out construction operations for other parties (see


Mainstream contractors’, that is, concerns whose trading activities include carrying out construction work for others, or providing labour for such work (see CISR12040), are not eligible to operate the arrangement. If you receive an application from such a contractor you should refuse it on the grounds that concerns defined as contractors under FA04/S59 (1)(a) are ineligible.

Contract valueThe contracts for which the arrangement is operated must not have a value exceeding £1,000 after adjustment for the cost of materials (SI2005/2045 reg 18(3)). If the contract value net of materials exceeds £1,000 this condition is not satisfied.

Any cases in which work, which would normally form one contract, is artificially broken down into a number of smaller contracts will fall outside the terms of the arrangement.

Note: Where you become aware that contracts are being artificially broken down you should examine the original application and CISR15160 in order to decide whether or not approval should be withdrawn.

Cases of difficulty should first be referred to the CIS Business Helpdesk. See CISR97010.

Withdrawal lettersIn complex cases you should not issue a letter of withdrawal from the arrangement without first sending a report of the circumstances to the CIS Advisory Team and obtaining approval for this course of action (see


HMRC approvalThe arrangement is not open to mainstream contractors and can only be adopted by deemed contractors with the approval of HMRC. You should not give approval to a contractor who has a history of poor compliance with the Scheme. If you receive an application from such a case you should make a report to CIS Business Helpdesk.