50.5  Sub-Contractors in the Construction Industry Scheme

The following provisions shall apply in respect of the Sub-Contractor Legislation (as defined in clause 50.5(a)(i)):

(a)  In this clause 50.5 (but not otherwise):

(i)  Sub-Contractor Legislation means Chapter 3 of Part 3 Finance Act 2004, the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045) and the Income Tax (Construction Industry Scheme) (Amendment) Regulations 2007 or any other statute or subordinate legislation relating to the Scheme as from time to time modified or replaced either before or after the date of this Contract;

(ii)  Principal means a person who is a contractor for the purposes of the Sub-Contractor Legislation;

(iii)  Statutory Deduction means the deduction referred to in section 61 of the Finance Act 2004 or such other deduction as may be required by Sub-Contractor Legislation;

(b)  the parties acknowledge that the Authority is a Principal, and the Service Provider is a sub contractor and this Contract is a contract relating to construction operations for the purposes of the Sub-Contractor Legislation and that therefore the Sub-Contractor Legislation shall apply to all payments to be made by the Authority to the Service Provider pursuant to this Contract;

(c)  not later than fifteen (15) Business Days before the first payment under this Contract is due to be made to the Service Provider or after this clause 50.5 applies for the first time and on each occasion when this clause 50.5 applies following a period when it has not so applied, the Service Provider shall, to the extent appropriate under the Sub-Contractor Legislation, provide the Authority with all information and assistance which may be required by the Authority in order to verify the Service Provider's entitlement to be paid without the Statutory Deduction under the Sub-Contractor Legislation, or the rate of Statutory Deduction which is applicable to such payment, including (but not limited to) its unique taxpayer reference;

(d)  the Authority shall as a Principal:

(i)  provide to the Service Provider in writing any information required under Section 4(8) of the Income Tax (Construction Industry Scheme) Regulations 2005 or such other information as may be required by the Sub-Contractor Legislation at the relevant time;

(ii)  submit monthly returns to HM Revenue and Customs in accordance with the Sub-Contractor Legislation,

as appropriate under the Sub-Contractor Legislation in force at the relevant time;

(e)  where any error or omission has occurred in calculating or making the Statutory Deduction then:

(i)  in the case of an over-deduction, the Authority shall correct that error by repayment of the sum over-deducted to the Service Provider (save where the Authority has accounted for that deduction to H M Revenue and Customs, in which case such repayment shall be made following and to the extent of receipt by the Authority of a corresponding repayment from H M Revenue and Customs which the Authority shall use reasonable endeavours to procure as soon as reasonably possible); and

(ii)  in the case of an under-deduction, the Service Provider shall correct that error or omission by repayment of the sum under-deducted to the Authority forthwith on written demand;

(f)  if compliance with this clause 50.5 causes the Authority or the Service Provider to breach any other term of this Contract, then the provisions of this clause 50.5 shall prevail, and in particular (without limitation) any clause in this Contract or any other Project Document which:

(i)  require the payment of interest by the Authority to the Service Provider (to the extent that they require such payment of interest); or

(ii)  give the Service Provider the right to terminate this Contract due to amounts of money due from the Authority to the Service Provider being unpaid,

shall not apply to any amount properly withheld or not paid by the Authority in accordance with the provisions of clause 50.5(e) or to an error or omission by the Authority in calculating or making the Statutory Deduction where that error or omission has been rectified under clause 50.5(d).