Welcome Construction Industry Scheme clarification for tenants

At 11:45pm this evening (9 January 2024), the consultation on proposed amendments to the construction industry scheme regulations will close.  This doesn't sound very exciting to many but to those that have to wrestle with the application of the existing rules, the introduction of these changes will be very welcome (albeit ideally with a few of our suggested tweaks).

The challenge at the moment is whether payments by landlord to tenant are within the construction industry scheme or not.  This is a common area of difficulty.  A landlord will often provide a capital contribution to a tenant at the start of a lease. Perhaps the tenant wants changes to be made to the property to accommodate its specific requirements: better lighting; different ventilation; additional electricity points (floor boxes) or the like.  Perhaps the landlord, concerned about void periods, wants to get the tenant to sign up before building works are fully completed.   

There is already a regulation that exempts some payments by landlords to tenants.  Regulation 20 of the Income Tax (CIS) Regulations 2005 (2005/2045) provides that a payment under a construction contract is not a contract payment if it is a reverse premium within the definition in ITTOIA 2005 (or the FA 1999 equivalent).  However, payments often did not clearly (or did not at all) fit into that definition.