(1)M1For the purposes of this Chapter a party to a contract relating to construction operations is a sub-contractor if, under the contract—
(a)he is under a duty to the contractor to carry out the operations, or to furnish his own labour (that is to say, in the case of a company, the labour of employees or officers of the company) or the labour of others in the carrying out of the operations or to arrange for the labour of others to be furnished in the carrying out of the operations; or
(b)he is answerable to the contractor for the carrying out of the operations by others, whether under a contract or under other arrangements made or to be made by him.
(2)M2This subsection applies [F1(subject to subsection (2A) below)] to the following persons, that is to say—
(a)any person carrying on a business which includes construction operations;
[F2(aa)any public office or department of the Crown (including any Northern Ireland department [F3and any part of the Scottish Administration]);]
(b)any local authority;
(c)any development corporation or new town commission;
(d)the Commission for the New Towns;
[F4(da)the Secretary of State if the contract is made by him under section 89 of the M3Housing Associations Act 1985;]
(e)the Housing Corporation,F5. . . a housing association, a housing trust, the Scottish Special Housing Association, and the Northern Ireland Housing Executive;
[F6(ea)any such body, being a body (in addition to those falling within paragraphs (aa) to (e) above) which has been established for the purpose of carrying out functions conferred on it by or under any enactment, as may be designated as a body to which this subsection applies in regulations made by the Board;]
(f)M4a person carrying on a business at any time if—
(i)his average annual expenditure on construction operations in the period of three years ending with the end of the last period of account before that time exceeds [F7£1,000,000], or
(ii)where he was not carrying on the business at the beginning of that period of three years, one-third of his total expenditure on construction operations for the part of that period during which he has been carrying on the business exceeds [F7£1,000,000];
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F9(2A)Subject to subsection (2B) below, subsection (2) above does not apply at any time to an office, department or body falling within paragraph (aa), (b), (c), (d), (e) or (ea) of that subsection unless that office, department or body has, in the period of three years ending with the 31st March next before that time, had an average annual expenditure on construction operations of more than £1,000,000.
(2B)Where the condition provided for in subsection (2A) above has been satisfied in the case of any office, department or body in relation to any period of three years, that subsection shall not prevent subsection (2) above from applying to that office, department or body until there have been three successive years after the end of that period in each of which the office, department or body has had expenditure on construction operations of less than £1,000,000.]
(3)M5Where section 559(1)(b) begins to apply to any person in any period of account by virtue of his falling within subsection (2)(f) above, it shall continue to apply to him until he satisfies the Board that his expenditure on construction operations has been less than [F7£1,000,000] in each of three successive years beginning in or after that period of account.
(4)Where the whole or part of a trade is transferred by a company (“the transferor”) to another company (“the transferee”) and section 343 has effect in relation to the transfer, then in determining for the purposes of this section the amount of expenditure incurred by the transferee—
(a)the whole or, as the case may be, a proportionate part of any expenditure incurred by the transferor at a time before the transfer shall be treated as if it had been incurred at that time by the transferee; and
(b)where only a part of the trade is transferred the expenditure shall be apportioned in such manner as appears to the Board, or on appeal to the Commissioners, to be just and reasonable.
(5)M6In this section—
“development corporation” has the same meaning as in the M7New Towns Act 1981 or the M8New Towns (Scotland) Act 1968;
“housing association” has the same meaning as in the M9Housing Associations Act 1985 or the M10Housing (Northern Ireland) Order 1981;
“housing trust” has the same meaning as in the M11Housing Associations Act 1985; and
“new town commission” has the same meaning as in the M12New Towns Act (Northern Ireland) 1965.
Textual Amendments
F1Words in s. 560(2) inserted (with effect in accordance with Sch. 8 para. 2(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 8 para. 2(2)
F2S. 560(2)(aa) inserted (with application in accordance with Sch. 27 para. 2(3) of the amending Act) by Finance Act 1995 (c. 4), Sch. 27 para. 2(1)(a)
F3Words in s. 560(2)(aa) inserted (1.7.1999) by The Scotland Act 1998 (Consequential Modifications) (No.2) Order 1999 (S.I. 1999/1820), art. 1(2), Sch. 2 para. 87(3)
F4S. 560(2)(da) inserted (1.11.1998) by Government of Wales Act 1998 (c. 38), Sch. 16 para. 58(a); S.I. 1998/2244, art. 5
F5Words in s. 560(2)(e) repealed (1.11.1998) by Government of Wales Act 1998 (c. 38), Sch. 16 para. 58(b), Sch. 18 Pt. 6; S.I. 1998/2244, art. 5
F6S. 560(2)(ea) inserted (with application in accordance with Sch. 27, para. 2(3) of the amending Act) by Finance Act 1995 (c. 4), Sch. 27, para. 2(1)(b)
F7Words in s. 560(2)(f)(3) substituted (with application in accordance with Sch. 27 para. 2(3) of the amending Act) by Finance Act 1995 (c. 4), Sch. 27, para. 2(2)
F8Words in s. 560(2) repealed (24.7.2002) by Finance Act 2002 (c. 23), Sch. 40 Pt. 3(16)
F9S. 560(2A)(2B) inserted (with effect in accordance with Sch. 8 para. 2(3)(4) of the amending Act) by Finance Act 1998 (c. 36), Sch. 8 para. 2(2)
Marginal Citations
M1Source-1975 (No.2) s.69(2)
M2Source-1975 (No.2) s.69(3)
M4Source-1975 (No.2) s.69(3A); 1980 Sch.8 1
M5Source-1975 (No.2) s.69(3B), (3C); 1980 Sch.8 1
M6Source-1975 (No.2) s.71(3)