This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Construction Industry Scheme Reform Manual

Deductions: credit and repayment: gang leaders

CISR72600 Action guide contents

Contractor Obligations

The contractor must meet their obligations under CIS for payments they make to the gang leader as follows,

  • The contractor should be satisfied that the contract between themselves and the gang leader is one of self-employment.
  • The contractor should decide whether the gang leader’s payment status needs to be verified before first payment is made. For further guidance see CISR51000 onwards.
  • The contractor should make payments to the gang leader, gross or under deduction, as advised by HMRC.
  • The contractor should give or send the payment and deduction statement to the gang leader within 14 days of the end of the Income Tax month to which it relates.
  • The contractor does not need to be concerned with the transactions between the gang leader and the other members of the gang.
  • If the contractor makes a separate agreement with any other member of that gang, then that member will be a subcontractor or employee of the contractor. The contractor must then, upon payment to them apply the deduction scheme or PAYE in each case.

Gang leader Obligations

  • The gang leader takes on the role of contractor when they make payments to members of the gang and they in their turn become the gang leader’s subcontractors, unless they are to be treated as employees of the gang leader.
  • The gang leader must therefore meet their obligations under the Scheme for payment to their subcontractors and PAYE for employees, as appropriate.

Failure to make deductions

Difficulties may arise where a gang leader fails to make deductions from payments to gang members. In such circumstances, the gang member will not be entitled to credit, nor will they be able to obtain it because neither the CIS system nor the Employers Section will have any record of deductions and HMRC will be unable to confirm that any credit is due.

Where you find that a gang leader has failed to make deductions you should consider making an appropriate determination under Regulation 13(2). Refer to CISR82000 onwards for details of this procedure.

Particular features

It must be borne in mind that gang leaders may be unknown to HMRC or may quickly ‘go unknown’. Where you become aware of such a case you should refer the matter using the RIS/CIS referral stencil for consideration of further action.


It is not always immediately apparent when a subcontractor is acting as a gang leader but this possibility should be borne in mind when you become aware of payment and deduction statements showing substantial amounts for labour payments.