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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: secondary legislation: regulation 3

This regulation sets out the arrangements under which a contractor can elect to operateseparate ITSC schemes for each part of the business. This regulation corresponds withfacilities provided under SI1993/744 reg 4.

A contractor can elect to be treated as a different contractor in relation to differentgroups of subcontractors: SI2005/2045 reg 3(1).

Where a contractor makes such an election, the regulations will have the effect oftreating the contractor as a different contractor for each group of subcontractors andeach group as constituting all the subcontractors paid by the contractor in respect ofconstruction operations: SI2005/2045 reg 3(2).

While a multiple contractor election continues, any new subcontractor must be allocated toone of the subcontractor groups: SI2005/2045 reg 3(3).

HMRC must be notified of a multiple contractor election before the beginning of the taxyear in which it is to take effect, subject to (6). The contractor must also provide HMRCwith information identifying the different groups of subcontractors and confirming that nopayments for construction operations are made outside of these groups: SI2005/2045 reg3(4) and (5).

Where a contractor acquires another construction business during the course of a tax yearthey must notify HMRC within 90 days of the acquisition that they wish to make a multiplecontractor election in relation to the acquired subcontractors, or that they wish to addthe acquired subcontractors to an existing multiple contractor election: SI2005/2045 reg3(6).

Definitions of ‘business’ and ‘acquired subcontractor’ are given at SI2005/2045 reg 3(7).

A multiple contractor election continues to have effect until the contractor notifies HMRCthat it is to be revoked: SI2005/2045 reg 3(8).

A revocation notice must be provided by the contractor before the beginning of the taxyear in which it is to take effect. Revoking an election does not mean that the contractorcannot make another election before the beginning of the next or later tax year:SI2005/2045 reg 3(9).

An election that has not yet come into effect can be revoked at any time before thebeginning of the tax year in which it was to take effect: SI2005/2045 reg 3(10).