Tax for construction lawyers

This subtopic brings together tax law content considered to be of relevance to construction lawyers.

Construction industry scheme

The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of sub-contractors in the construction industry under-declaring or failing to notify their chargeability to UK tax. The scheme operates to withhold tax at source at the point of making a contract payment (ie a payment made by a contractor under a construction contract), thereby reducing the risk of a subsequent default by the sub-contractor. However, if the sub-contractor can prove it has complied with the tax obligations it can apply to receive payments gross.

For more information on the CIS, see: Construction industry scheme—overview. The following Practice

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Latest Construction News

Adjudication—claimant’s insolvency should not be used as a ‘shield’ to enforcement (Malin v Volkerfitzpatrick)

Construction analysis: The Technology and Construction Court (TCC) enforced an adjudicator’s decision in favour of a claimant in administration, subject to a stay of execution. Though the defendant maintained a counterclaim against the claimant, and the claimant had offered no security in respect of that counterclaim, the court was not satisfied that the counterclaim was strong enough to justify an outright refusal to enforce.

Contractual interpretation and termination: Misunderstanding of contract terms results in repudiatory breach (BNP Paribas Depository Services v Briggs & Forrester)

Construction analysis: The [Technology and Construction Court (TCC)] granted declarations sought by an employer in relation to unlawful suspension and termination of a design and build contract and the contractor’s consequent repudiatory breach. The TCC held that suspension and termination notices served by the contractor, in relation to an alleged prevention of work by the owner by its failure to provide instructions in relation to asbestos removal work and structural repairs, were not valid.

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The Ministry of Housing, Communities and Local Government (MHCLG) has published a new Remediation Acceleration Plan (RAP), aimed at expediting the removal of unsafe cladding in England, identifying all unsafe buildings, and supporting residents from the financial burdens of remediation. The plan sets key targets for 2029, including remediating all 18m+ buildings with unsafe cladding in government-funded schemes by 2029, and ensuring all 11m+ buildings are either remediated, have a completion date, or landlords face severe penalties. The RAP is supported by increased enforcement investment, which will increase the capacity of local authorities, fire and rescue authorities and the Building Safety Regulator (BSR) to manage hundreds of cases annually. The publication of the RAP coincides with a Parliamentary debate on the findings of the Grenfell Tower Inquiry’s final report. During the debate, it was announced that a continuous review process for statutory guidance to building regulations will be introduced, covering fire safety and building design by the BSR. In addition, there will be a review of how the Building Regulations guidance is produced, updated, and communicated to the construction industry.

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