Income and Corporation Taxes Act 1988

560 Persons who are sub-contractors or contractors for purposes of Chapter IV

(1) For the purposes of this Chapter a party to a contract relating to construction operations is a sub-contractor if, under the contract—

(a) he is under a duty to the contractor to carry out the operations, or to furnish his own labour (that is to say, in the case of a company, the labour of employees or officers of the company) or the labour of others in the carrying out of the operations or to arrange for the labour of others to be furnished in the carrying out of the operations; or

(b) he is answerable to the contractor for the carrying out of the operations by others, whether under a contract or under other arrangements made or to be made by him.

(2) This subsection applies to the following persons, that is to say—

(a) any person carrying on a business which includes construction operations;

(b) any local authority;

(c) any development corporation or new town commission;

(d) the Commission for the New Towns;

(e) the Housing Corporation, a housing association, a housing trust, the Scottish Special Housing Association, and the Northern Ireland Housing Executive;

(f) a person carrying on a business at any time if—

(i) his average annual expenditure on construction operations in the period of three years ending with the end of the last period of account before that time exceeds £250,000, or

(ii) where he was not carrying on the business at the beginning of that period of three years, one-third of his total expenditure on construction operations for the part of that period during which he has been carrying on the business exceeds £250,000;

and in paragraph (f) “period of account” means a period for which an account is made up in relation to the business in question.

(3) Where section 559(1)(b) begins to apply to any person in any period of account by virtue of his falling within subsection (2)(f) above, it shall continue to apply to him until he satisfies the Board that his expenditure on construction operations has been less than £250,000 in each of three successive years beginning in or after that period of account.

(4) Where the whole or part of a trade is transferred by a company (“the transferor”) to another company (“the transferee”) and section 343 has effect in relation to the transfer, then in determining for the purposes of this section the amount of expenditure incurred by the transferee—

(a) the whole or, as the case may be, a proportionate part of any expenditure incurred by the transferor at a time before the transfer shall be treated as if it had been incurred at that time by the transferee; and

(b) where only a part of the trade is transferred the expenditure shall be apportioned in such manner as appears to the Board, or on appeal to the Commissioners, to be just and reasonable.

(5) In this section—

• “development corporation” has the same meaning as in the [1981 c. 64.] New Towns Act 1981 or the [1968 c. 16.] New Towns (Scotland) Act 1968;

• “housing association” has the same meaning as in the [1985 c. 69.] Housing Associations Act 1985 or the [S.I. 1981/156 (N.I. 3).] Housing (Northern Ireland) Order 1981;

• “housing trust” has the same meaning as in the Housing Associations Act 1985; and

• “new town commission” has the same meaning as in the [1965 c. 13 (N.I.).] New Towns Act (Northern Ireland) 1965.