Under the Isle of Man Construction Industry Scheme, a person may be a contractor if:
They carry on a business which includes construction operations
If they have this type of business and they engage subcontractors, they are a contractor. The businesses covered include builders who carry out construction work themselves and pay others to do so, property developers and speculative builders who build or alter properties to make a profit, gang leaders who organise labour for construction work and foreign businesses that carry out construction work in the Isle of Man. Or:
They carry on a business that spends an average of £50,000 or more a year over a three year period on construction operations
This includes businesses like manufacturers or retailers which are not primarily in the construction trade.
If a contractor’s spending on construction work has fallen below an average of £50,000 over a three year period, they must seek authorisation from the Income Tax Division to cease being treated as a contractor under the scheme.
In the case of a newly started business, where one third of total expenditure on construction operations for the period since commencement of the business exceeds £50,000, the business will be deemed to be a contractor for the purposes of the scheme.
Any type of business, including a company, partnership or self-employed individual, can be a contractor under the scheme.
If construction work is carried out on an individual’s home, they cannot be deemed to be a contractor even if they engage builders, and regardless of how much they spend, as they do not carry on a business.
For more information about what is classed as ‘construction operations’, please refer to the section on Which activities fall within the scheme?.
It is possible to be a contractor while also being engaged as a subcontractor by another main contractor for example, someone who is a gang leader. In these circumstances, it is important to comply with the obligations both as a contractor and subcontractor. For more information regarding subcontractors and their obligations under the scheme, please refer to GN44 - Subcontractor's Guide.