Which activities fall within the scheme?
Generally, anything carried out on a construction site in the Isle of Man in connection with construction work is likely to fall within the scheme. This includes not only the construction of new buildings, but also the demolition, alteration, repair, fitting and decorating of existing buildings.
As a guide, activities falling within the scheme are as follows:
- the construction, alteration, repair, extension, demolition or dismantling of buildings or structures, whether permanent or not;
- the construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land (without prejudice to the foregoing) walls, road works, power-lines, telecommunication apparatus, aircraft runways, docks and harbours, pipe-lines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence;
- the installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection;
- the internal cleaning of buildings and structures, so far as is carried out in the course of their construction, alteration, repair, extension or restoration;
- any operations which form an integral part of, or are preparatory to, or are for rendering complete, such operations as are previously described in this list of activities, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works;
- • the painting or decorating of the internal or external surfaces of any building or structure.
As a guide, the following activities generally fall outside of the scheme:
- the drilling for, or extraction of, oil or natural gas;
- the extraction, whether by underground or surface working, of minerals, tunnelling or boring, or construction of underground works for this purpose;
- the manufacture of building or engineering components or equipment, materials, plant or machinery, or delivery of any of these things to site;
- the manufacture of components for systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection, or delivery of any of these things to site;
- the professional work of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape;
- the making, installation and repair of artistic works, being sculptures, murals and other works which are wholly artistic in nature; sign writing and erecting, installing and repairing signboards and advertisements; • the installation of seating, blinds and shutters;
- the installation of security systems, including burglar alarms, closed circuit television and public address systems;
- service facilities such as a canteen, medical centre, site security or temporary office facilities.
Some construction contracts incorporate a number of activities, some of which will fall within the scheme and some outside. These are called Mixed Contracts. All payments due under such a contract should be treated as falling within the scheme. This applies even when only one of the activities falls within the scheme.
If in doubt, the contractor should contact the Income Tax Division to clarify how the payments should be treated, as failure to deduct tax when required can result in the contractor being held liable for any tax not deducted.