CISR12050 - The Scheme: contractors: ‘deemed’ contractors

Under the Scheme, some businesses, public bodies and other concerns outside the mainstream construction industry, but who regularly carry out or commission construction work on their own premises or investment properties, are deemed to be contractors.

Deemed contractors are set out at FA04/s59 (1)(b)-(l) to include the following

• businesses which do not include construction operations but which spend above a certain amount on construction operations.
• public bodies and other specified bodies which spend above a certain amount on construction operations.

Businesses

The amount these businesses must spend on construction operations, to be considered deemed contractors, is set out at FA04/s59 (1)(l). This is an average, annual, expenditure of £1 million or more for a period of three years ending at the end date of the latest period of account.

Alternatively, where the business did not exist at the beginning of that period of three years, one third of the business' total expenditure on construction operations for so much of those three years as the business has been in existence must amount to £1 million or more.

Public bodies

FA04/s59 (1) explicitly lists certain bodies and classes of body that are deemed to be contractors where they spend over a certain amount on construction operations.

They are

• any public office or department of the Crown (including any Northern Ireland department and any part of the Scottish Administration)
• the Corporate Officer of the House of Lords, the Corporate Officer of the House of Commons and the Scottish Parliamentary Body
• any local authority
• any development corporation or new town commission
• the Commission for the New Towns
• the Secretary of State if the contract is made by him under Section 89 of the Housing Associations Act 1985
• the Housing Corporation, a housing association, a housing trust, Scottish Homes and the Northern Ireland Housing Executive
• any NHS trust or Health and Social Services (HSS) trusts.

The amount these bodies must spend on construction operations to be considered deemed contractors is set out at FA04/s59 (2). This is an average annual expenditure of £1 million or above for a period of three years ending on the preceding 31 March.

‘Own-build’ – Regulation 22

The Scheme does not need to be applied to certain payments made by businesses brought into it by virtue of them spending an average of £1 million or more on construction operations. This is described further at CISR15140 and the legislation is explained at CISR17230. For guidance on where a business seeks to be de-registered because all its payments fall within the terms of this regulation, see CISR12060.