CISR14020 - The Scheme: construction operations: scope of CIS

The Construction Industry Scheme does not apply to all contracts involving construction operations. For CIS to apply, certain factors must be present in the situation. There must be a 'contract relating to construction operations' under which

• one party is a 'subcontractor' (as defined in FA04/S58)

and

• another party is a 'contractor' because they are defined as such in FA04/S59 or because they are also a subcontractor under a contract relating to construction operations.

Contract

The expression 'relating to construction operations' is quite broad. Any contract awarded by a contractor that lays a duty on another party to execute, or arrange for the execution of construction operations, or supply labour for such operations, represents a contract relating to construction operations. This applies even if the construction element only forms part of the overall contract. Thus a contract to supply and install fixed furniture such as a fitted kitchen, for instance, would be regarded as a contract relating to construction operations by virtue of the installation element.

A contract means any legally binding agreement or arrangement under which one person does work or provides services for another person. A contract includes an arrangement made by word of mouth as well as a written document. There are standard forms of contract drawn up by the Joint Contracts Tribunal (JCT) for the construction industry. See CISR14030 for more details of the differing types of contract you may encounter.

Subcontractor

Under FA04/S58 a subcontractor, under a contract relating to construction operations (not being a contract of employment), is someone who is either

• under a duty to the contractor to:

• answerable to the contractor for the carrying out of the operations by others.

This provision is framed to catch any person executing or contributing to the execution of construction operations on subcontract terms. It covers not only substantial building businesses but also individual subcontractors who supply only their own labour, labour agencies that supply construction workers and developers who arrange for construction work to be carried out by others.

For more detailed information about subcontractors, see CISR13000 onwards.

Contractors

What constitutes a contractor is fully described at CISR12000 onwards.

Construction Operations

The expression 'construction operations' covers almost anything that is done in the United Kingdom and its territorial waters to a building, structure, civil engineering work or installation, whether of a permanent or temporary nature. This includes:

• construction
• alteration
• repair
• extension
• demolition
• dismantling.

Anything done on a construction site in connection with construction work is therefore likely to be a construction operation unless it falls in one of the following classes.

• It is clearly not, by its nature, a construction operation. This applies to activities such as the running of canteen, hostel, medical, safety, security or temporary office facilities.
• It is specifically excluded from the Scheme by FA04/S74 (3) (the excluded operations are dealt with in detail later in this section).