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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: primary legislation: section 60

Payments to which the scheme must be applied are known as ‘contract payments’. Thissection defines a contract payment.

A contract payment is any payment made by a contractor, under a construction contract, to

  • a subcontractor: FA04/S60 (1)(a)
  • a person nominated by the subcontractor or the contractor: FA04/S60 (1)(b)
  • a person nominated by a person who is a subcontractor under another such contract relating to all or any of the construction operations: FA04/S60 (1)(c)

The purpose of sub-sections (b) and (c) is to ensure that payments are attributed tothe subcontractor undertaking the construction operations rather than to the personactually receiving the payment.

Not all payments made under a construction contract are contract payments: FA04/S60 (2).The exceptions are:

  • payments treated as made under a contract of employment under the labour agency provisions: FA04/S60 (3)
  • where the person receiving the payment is registered for gross payment at the time the payment is made FA04/S60 (4) - for partnership rules please see FA04/S60 (5) and (6)
  • any payment prescribed by HM Revenue & Customs in regulations: FA04/S60 (7) See SI2005/2045 reg 18 to 24.

A payment which is due to a person within sub-section (1) but is paid to a person notwithin that sub-section is treated as made to the person within sub-section (1): FA04/S60(8)