Part 3

Income tax, corporation tax and capital gains tax
Chapter 3

Construction industry scheme

Introduction

Contractors
59
1
This section applies to the following bodies or persons—
a
any person carrying on a business which includes construction operations;
b
any public office or department of the Crown (including any Northern Ireland department, the Welsh Assembly Government and any part of the Scottish Administration);
c
the Corporate Officer of the House of Lords, the Corporate Officer of the House of Commons, the Scottish Parliamentary Corporate Body and the National Assembly for Wales Commission;
d
any local authority;
e
any development corporation or new town commission;
f
the Homes and Communities Agency;
fa
the Greater London Authority in the exercise of its functions relating to housing or regeneration or its new towns and urban development functions;
g
the Secretary of State if the contract is made by him under section 89 of the Housing Associations Act 1985 (c. 69);
h
the Regulator of Social Housing, a housing association, a housing trust, Scottish Homes, and the Northern Ireland Housing Executive;
i
any NHS trust;
j
any HSS trust;
k
any such body or person, being a body or person (in addition to those falling within paragraphs (b) to (j)) which has been established for the purpose of carrying out functions conferred on it by or under any enactment, as may be designated as a body or person to which this section applies in regulations made by the Board of Inland Revenue;
l
a person carrying on a business at any time if, in the period of one year ending with that time, the person's expenditure on construction operations exceeds £3,000,000.
2
But this section only applies to a body or person falling within any of paragraphs (b) to (fa) or (h) to (k) of subsection (1) at any time if, in the period of one year ending with that time, the body or person's expenditure on construction operations exceeds £3,000,000.
3
Where the condition in subsection (1)(l) or (2) is met in relation to a body or person at any time, the body or person may elect for the condition to be treated as no longer being met if, at that time, the body or person is not expected to make any further expenditure on construction operations.
3A
Where the condition in subsection (1)(l) or (2) ceases to be met in relation to a body or person at any time, the body or person may elect for the condition to be treated as continuing to be met until the body or person is not expected to make any further expenditure on construction operations.
3B
Subsections (3) and (3A) do not prevent the condition in subsection (1)(l) or (2) from being met again in relation to the body or person.
4
Where the whole or part of a trade is transferred by a company (“the transferor”) to another company (“the transferee”) and Chapter 1 of Part 22 of the Corporation Tax Act 2010 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 is to 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 is to be apportioned in such manner as appears to the Board of Inland Revenue, or on appeal to the tribunal, to be just and reasonable.
5
In this section—
- “development corporation” has the same meaning as in—
  1. the New Towns Act 1981 (c. 64), or
  2. the New Towns (Scotland) Act 1968 (c. 16);
- “enactment” includes an enactment comprised in an Act of the Scottish Parliament and a provision comprised in Northern Ireland legislation;
- “housing association” has the same meaning as in—
  1. the Housing Associations Act 1985 (c. 69), or
  2. Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/ 1725 (N.I. 15));
- “housing trust” has the same meaning as in the Housing Associations Act 1985;
- “HSS trust” means a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991 (S.I. 1991/194 (N.I. 1));
- “new town commission” has the same meaning as in the New Towns Act (Northern Ireland) 1965 (c. 13 (N.I.));
- “NHS trust” means a National Health Service trust—
  1. established under section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006, or
  2. constituted under section 12A of the National Health Service (Scotland) Act 1978 (c. 29).
6
In this section references to a body or person include references to an office or department.
7
The Board of Inland Revenue may make regulations amending this section for the purpose of removing references to bodies which have ceased to exist.
8
This section is subject to section 73A (designated international organisations: exemption from section 59).
Words in s. 59(5) substituted (1.3.2007) by National Health Service (Consequential Provisions) Act 2006 (c. 43), s. 8(2), Sch. 1 para. 256 (with Sch. 3 Pt. 1)
S. 59(8) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 459 (with Sch. 2)
Words in s. 59(1)(b) inserted (25.5.2007) by The Government of Wales Act 2006 (Consequential Modifications and Transitional Provisions) Order 2007 (S.I. 2007/1388), art. 1(2), Sch. 1 para. 107(a)
Words in s. 59(1)(c) substituted (25.5.2007) by The Government of Wales Act 2006 (Consequential Modifications and Transitional Provisions) Order 2007 (S.I. 2007/1388), art. 1(2), Sch. 1 para. 107(b)
S. 59(1)(h) modified (E.W.) (1.12.2008) by The Transfer of Housing Corporation Functions (Modifications and Transitional Provisions) Order 2008 (S.I. 2008/2839), arts. 1(1), 3, Sch. para. 1 (with art. 6)
Words in s. 59(1)(f) substituted (1.12.2008) by Housing and Regeneration Act 2008 (c. 17), s. 325(1), Sch. 8 para. 82; S.I. 2008/3068, art. 2(1)(b)(3) (with arts. 6-13)
Word in s. 59(4)(b) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 420
Words in s. 59(1)(h) substituted (1.4.2010) by Housing and Regeneration Act 2008 (c. 17), s. 325(1), Sch. 9 para. 33; S.I. 2010/862, art. 2 (with Sch.)
Words in s. 59(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 426 (with Sch. 2)
S. 59(1)(fa) inserted (1.4.2012) by Localism Act 2011 (c. 20), s. 240(2), Sch. 19 para. 42(2); S.I. 2012/628, art. 6(i) (with arts. 9, 11, 14, 15, 17)
S. 59(2)-(3B) substituted for s. 59(2)(3) (6.4.2021 for the tax year 2021-22 and subsequent tax years) by Finance Act 2021 (c. 26), Sch. 6 para. 2(3) (with Sch. 6 para. 3)
S. 59(1)(l) substituted (6.4.2021 for the tax year 2021-22 and subsequent tax years) by Finance Act 2021 (c. 26), Sch. 6 para. 2(2)