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

HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
, see all updates

Non-Residents Working on the UK Continental Shelf: Construction Industry Scheme - Application of Construction Industry Scheme to the oil and gas industry

The Construction Industry Scheme provides for the deduction from payments made by contractors to certain sub-contractors. Guidance on the operation of the scheme can be found in HMRC’s booklet CIS340 and in the Construction Industry Scheme Reform Manual (CISR).

The scheme applies only to payments for those construction operations that take place on the mainland of the UK or within its territorial waters.

The definition of construction operations excludes drilling for, or extraction of, oil or natural gas. The operation of drilling rigs is therefore outside the scheme.

Examples of offshore activities that involve construction operations are:

  • The construction of oil and gas production platforms.
  • The construction and installation of deck modules for production platforms.
  • The laying of underwater or underground pipelines.
  • The construction of terminal facilities.

Where a payment within the scheme is made by a contractor to a subcontractor, deductions at the appropriate rate must be made from the full payment except for that part of which represents the cost of materials.