CISR17235 - The scheme: scope of incidental: appendix to Regulation 22
Source: gov.uk (2025-12-09)


SI2005/2045 Reg 22 provides that where deemed contractors make a payment under a construction contract, for construction work undertaken on a property they use for the purposes of their business, then that payment will not fall within the provisions of the Construction Industry Scheme.

However, Regulation 22(2) provides that a property is not being used for the purposes of a persons business if it is for sale, or to let, (unless the sale or letting of that property is purely incidental to the business) or is held as an investment by that person. It also states that in determining if a property is used for the purposes of the business, any incidental use of the property by any other person can be disregarded.

This appendix provides examples whereby, if construction work was undertaken, it would be excluded from the Construction Industry Scheme by virtue of Regulation 22(1), or included within the scheme by virtue of Regulation 22(2).

For further guidance, incuding the meaning of 'incidental' for Reg 22 purposes, please see CISR15140 (https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr15140)

A business commissions the building of a new factory/industrial plant, or the extension/alteration of an existing factory/industrial plant, to be solely used for the purpose of that business.

An Insurance company providing property insurance, directly engages and pays subcontractors to carry out repairs to the properties of their policy holders, rather than making payments directly to the policy holders themselves. The property is not used for the purpose of the insurance company’s business.

A company commissions the building of new office accommodation, or the refurbishment of existing office accommodation, which is to be used for the purpose of that company's business.

A property investor engages a subcontractor to carry out a £5m refurbishment to a recent property acquisition. As the property is held as an investment, the contract payment to the subcontractor falls within the CIS. (N.B. Property Investors usually will only be brought into CIS as deemed contractors, where their expenditure on construction operations exceeds £3m per annum, as per FA04/S59(1). If a property investor undertakes property development, then it will be a mainstream contractor. For further information, please see: CISR12080 (https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr12080).

A retailer commissions the building of a new shop/store, or the refurbishment of an existing shop/store, to be solely used for the purpose of their business.

A business acquires a property for the purpose of its own business use (for example: - to use for storage purposes).

To secure the purchase of a property, a business was required to also purchase a residential flat adjoining that property. The flat is surplus to requirements and there is no intention to let it. The business has construction work undertaken on the main property and/or the adjoining flat. The acquisition of the adjoining flat is incidental to the business.

A company acquires a business property which includes a flat that is surplus to requirements. The flat is used as an incentive for the company's employees and therefore it’s use is incidental to the business. For example:

A business purchases land and let properties sited on that land, knowing that historically those properties have proven difficult to sell due to nearby external influences. The business therefore continues to let those properties. This letting is not incidental to the business.
- Short term accommodation for a Locum working within the business (but not where it is an assured shorthold lease)
- An incentive to attract employees to work in a remote area
- Accommodation to be used when it is business critical to have an employee on site
A retail chain builds a commercial building on its surplus land with the intention of letting that building to an independent tenant. (For example, a supermarket chain building a petrol station alongside one of its stores which it then lets to a fuel retailer).

A retail company letting a proportion of their trading premises to franchisees. (For example: - a clothing retailer letting part of their stores to franchised coffee shops).