CISR12040 - The Scheme: contractors: mainstream contractors
Source: gov.uk (2025-10-17)


'Mainstream contractors' are businesses that
- carry out construction work, or
- supply labour for carrying out construction work.
They include the following
- construction businesses (including foreign businesses carrying out construction work in the UK)
- property developers or speculative builders erecting and altering buildings in order to make a profit.
- gang leaders organising labour for construction work.
These businesses are liable to operate the Construction Industry Scheme whatever the level of their expenditure on construction operations (FA04/s59 (1)(a)). Any business which is registered as a subcontractor for the purposes of CIS and subcontracts elements of its work that come within the Scheme is acting as a contractor under CIS (FA04/s57 (2)).

Construction businesses

These are businesses whose activities consist of or include carrying out construction operations for other parties and which use subcontract labour for this purpose.

Property developers and Property investment businesses

See the separate guidance at CISR12080 (https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr12080).

Gang leaders

Where a contractor negotiates with a gang leader to pay the gang-leader for work done by the gang and the gang leader shares out the money amongst the gang, the gang leader is a contractor for the other gang members and the original contractor only deals with one subcontractor; the gang leader.

Labour agencies

Generally labour agencies are not contractors under the scheme although they can be subcontractors, see CISR13050 (https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr13050). Since 6 April 1998 a labour agency that supplies workers to a contractor is usually obliged under the agency rules to operate PAYE where the contract between the agency and the worker is a contract for services. This means that circumstances in which an agency has to operate the Construction Industry Scheme in the role of contractor are likely to be rare.

For further information about the agency rules read the Employment Status Manual at ESM2030 (https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm2030).

Off-payroll working

Where ‘deemed employment’ arises under the off-payroll working rules, the CIS will not apply. The off-payroll working rules take priority over the CIS (FA04/s60(3A)). Very exceptionally, where neither the agency nor the off-payroll working rules apply to payments to agency workers, any payments for construction work will fall within the scheme. The agency will then be a contractor and will need to fulfil its obligations in that role.

For further information about off-payroll working rules read the Employment Status Manual at ESM10004A (https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm10004a).

Arms-Length Management Organisations

An Arms-Length Management Organisation (ALMO) is a company set up by a local authority to manage or improve all or part of its housing stock. The company is owned and run by the local authority with ‘volunteer’ directors and operates under the terms of a management agreement between the local authority and the ALMO. ALMOs are treated as contractors by virtue of s59 (1)(a) in that they are carrying on a business that includes construction operations. Such a business is not a deemed contractor nor is it a Local Authority and it cannot avail itself of the small payments exemption allowed by SI2005/2045 reg 18. (See CISR15150 (https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr15150)).

Any payment under the management agreement that passes between the Local Authority and the ALMO is not paid under a contract relating to construction operations and therefore CIS will not apply. Consequently it is unlikely that an ALMO will be a subcontractor unless they enter into contracts relating to construction operations with other concerns that are contractors.