BIM66205 - Subcontractors: determination of correct Schedule of charge

Practical considerations

It is important that you deal with subcontractors under the correct Schedule of charge. The general principles are explained at ESM0101 onwards.

Cases which may merit closer examination include those where some or all of the following features are present

• The accounts of a self-employed person contain none of the usual indications of normal trading or professional activities such as purchase of supplies, ownership of plant, wages to non-family members or other expenses paid out.
• The self-employed person was previously in employment in the same kind of work, perhaps with the same engager.
• The worker appears to be working more or less continuously for only one engager.

If necessary you should examine PAYE records to see whether the worker is one of a number of employees who having ceased employment have been re-engaged on a self-employed basis.

Construction Industry

Factsheet CIS349 ‘Are your workers employed or self-employed? – Advice for contractors’ provides guidance about the status of workers in the construction industry. For more detailed advice please refer to the Employment Status Manual.

The operation and existence of the Construction Industry Tax Deduction Scheme does not affect the schedule of charge under which you should deal with subcontractors. Only persons engaged under contracts which do not amount to contracts of employment fall within the Construction Industry Tax Deduction Scheme, and a CIS 6 certificate is not proof of self- employed status. The guidance at ESM0101 onwards applies in the normal way.

If you are satisfied that the subcontractor is correctly assessable under Schedule D, you should deal with the expenses charged in the accounts in accordance with BIM66210 onwards.