In general, a subcontractor can be:
- a self-employed individual working on their own or in partnership with others; or
- a company, which may be either resident or non-resident for Isle of Man income tax purposes.
The individual, partnership or company is a subcontractor if, under a contract, they have a duty to a contractor to either:
- carry out construction operations; or
- provide their own labour, the labour of others or to arrange for the labour of others to be provided to carry out the operations. Where the subcontractor is a company, the provision of labour refers to the labour of employees or officers of the company, including directors.
In addition to the above, a subcontractor can be an individual, partnership or company given responsibility by the contractor for arranging for operations to be carried out by others. This includes a labour agency or staff bureau which contracts either to get work done using its own workers or to supply the service of workers to a contractor. This can include a gang leader who, in turn, will be acting as a contractor when making payments to the members of the gang.
It is important to note that payments made by the individual, partnership or company to any employees will be subject to Income Tax Instalment Payments (ITIP) in the normal way and that the Construction Industry Scheme only applies to subcontractors.