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Subcontractor

I want to know what obligations a contractor has to their subcontractor

A contractor is obliged to ensure that, when making payments to subcontractors or deducting tax from those payments, they comply fully with the requirements of the Isle of Man Construction Industry Scheme. They should:

• notify the Income Tax Division when they engage a subcontractor by submitting form C20 “Subcontractor Commencing” within 14 days of the date of their engagement;
• confirm whether the subcontractor holds a valid tax exemption certificate and deduct income tax from any payments where a valid certificate is not presented;
• remit any income tax deducted to the Division by the due date;
• issue a form C11 “Certificate of Tax Deducted in Respect of Subcontracted Work” to the subcontractor each time a payment is made;
• complete a form C14 “Isle of Man Subcontractor’s Deduction Card” at the end of the tax year and give a copy to the subcontractor for their records;
• notify the Division within 14 days when they cease to engage a subcontractor and they have no intention of engaging them in the future by using form C21 “Certificate of Payments and Tax Deducted for a Part Year”.

If the subcontractor does not receive a C11 or C14 when they are due, they should request them from the contractor as the details are required for the subcontractor’s income tax return, and the forms may be requested by the Division. If, after requesting these forms from the contractor, they are still not provided, the subcontractor should contact the Division. If the subcontractor does not have the forms, it may not be possible for any tax deducted to be credited to their account.

I want to know about engaging subcontractors of my own

It is possible to be a contractor and a subcontractor at the same time. Construction businesses are often paid by a contractor for doing construction work, while at the same time paying their own subcontractors to do work for them. When being paid by a contractor to do construction work they are subcontractors and must follow the guide for subcontractors. When paying their own subcontractors they are a contractor and must follow GN 21 - Contractor’s Guide.