CISR14049 - The Scheme: appendix to Regulation 20A
Source: gov.uk (2025-04-24)


Examples

These examples are not intended to provide for every specific scenario but rather to give an overview of the correct treatment.

Work on the property occupied by the tenant

1. A landlord (L) owns a vacant commercial building containing a residential flat. L agrees with a prospective tenant (PT) that, provided PT leases the whole building for the next 5 years, L will pay towards the cost of internal alterations to the building necessary for installing specific fixtures and fittings to meet PT's needs. Provided L's payment is for works intended for the primary benefit and use of that tenant it would meet the Regulation 20A(1)(e) condition. If the other conditions of Regulation 20A are met, L's payment would not be considered a contract payment for CIS purposes.

However, if the payment is also for other work on the core or shell of the building (see CISR14048 (https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14048)), such as replacing part of the roof or replacing windows, this work would not meet the Regulation 20A(1)(e) condition. As part of the works would not qualify under Regulation 20A none of the payment would be exempt under Regulation 20A.

As Regulation 20A applies to payments it would be possible to make a payment for the qualifying work and a separate payment for non-qualifying work. Payments including non-qualifying work would be considered contract payments for CIS purpose

2. A landlord and tenant agree to vary an existing lease to increase the area the tenant occupies in a multiple tenanted office building. The landlord agrees to fund the tenant's installation of new interior partition walls (separating them from other tenants) and new floor boxes to meet the tenant’s business needs. This will meet the Regulation 20A(1)(e) condition and provided the other conditions of Regulation 20A are met, this payment will not be considered a contract payment for CIS purposes.

3. A landlord and tenant agree a lease for an office and a testing laboratory. Due to the bespoke fit out required by the tenant, the landlord agrees that the tenant can carry out the refurbishment of the area leased, including installing specialist heating and ventilation units required for the laboratory. The landlord makes a payment towards the work. This will meet the Regulation 20A(1)(e) condition and, provided the other conditions of Regulation 20A are met, this payment will not be considered a contract payment for CIS purposes

Work on common areas

4. A landlord agrees to pay a new tenant, the costs of fitting out an office building to meet their needs. This includes installing specialist plant (air conditioning units and servers) in the building’s plant room that requires some changes to the core of the building, new signage, the installation of a separate reception area, security gates and refurbishment of toilets used exclusively by the tenant. It also includes additional lockers and bike racks in the basement that are required by the tenant that may at times be used by others, but the tenant is the main user of these. This payment would meet the Regulation 20A(1)(e) condition and, provided the other conditions of Regulation 20A are met, this payment will not be considered a contract payment for CIS purposes

Sub-tenants

5. A company (C) agrees a lease with the owner of a building that permits the property to be sub-let. C intends to occupy 3 floors of the property and sub-let 1 floor. The owner agrees to pay C for the fit out works. C enters into a contract with a third person to do this work. The construction work is primarily for the benefit and use of C and their sub-tenants occupying the property under the lease. This payment would meet the Regulation 20A(1)(e) condition and, provided the other conditions of Regulation 20A are met, this payment will not be considered a contract payment for CIS purposes.

A company (C) agrees a lease with a landlord and intends to let all the property. The landlord makes a payment to C for the fit out of the property. This payment would not meet the Regulation 20A(1)(e) condition as C will not occupy the property under the lease. The payment will be a contract payment for CIS purposes (if it does not meet the conditions of Regulation 20).