4 - Subcontract Accounts
4.1 Rule 4 only applies to Subcontract Retentions.
Depositing Retention Funds
4.2 Whenever a payment becomes due to the Subcontractor:
4.2.1 Where required under in Rule 4.13, the Contractor must, on or before the Final Date for Payment, deposit into the applicable Subcontract Account the sum that we have notified them is required; and
4.2.2 The Subcontractor must, after the final date on which the Subcontract permits the issue of a Pay Less Notice in respect of the payment in question by the Contractor upload to the online portal a copy of:
(a) the Payment Notice establishing the sum due, or
(b) the Pay Less Notice, if a Pay Less Notice has been issued in respect of the payment in question.
4.3 All deposits made under Rule 4.2.1 must be:
4.3.1 Made in pounds-sterling;
4.3.2 Made from a bank account held in the Contractor’s own name, from a Bank located in the United Kingdom; and
4.3.3 Carry the Subcontract Account reference number as the payment reference.
4.4 Any transfers into the Subcontract Account that do not meet the criteria set out in Rule 4.3 will not be accepted into the Scheme, and, subject to the Compliance Requirements, will be returned to the account from which they were received.
Allocation of Retention Funds
4.5 To the extent it is possible to do so, Subcontract Accounts will not be funded by cash deposits. They will instead be funded by an allocation of a portion of the Tier 1 Retention that we hold.
4.6 When a Subcontractor uploads a Payment Notice or a Pay Less Notice to the online portal, we will check the uploaded document to confirm the amount of Subcontract Retention that the Contractor is required or permitted to withhold under the Subcontract.
4.7 If the Subcontractor does not upload a Payment Notice or a Pay Less Notice to the online portal within five Business Days of the date specified in Rule 4.2.2, the Contractor may upload any missing documentation.
4.8 Once we have ascertained from the most recent Payment Notice or Pay Less Notice that has been uploaded to the online portal how much Subcontract Retention should be withheld, we will allocate to the Subcontract Account a portion of the Tier 1 Retention we hold equal to the amount of Subcontract Retention that was due for withholding as at the applicable Final Date for Payment, and we will hold that amount on trust for the Subcontractor.
4.9 We will update our assessment of the amount of Subcontract Retention due to be withheld under the Subcontract each time a new Payment Notice or Pay Less Notice for the relevant Subcontract Account is uploaded. Each time that we update this assessment, the portion of the Tier 1 Retention that we hold on trust for the Subcontractor will be updated so that we always hold on trust for the Subcontractor a sum equal to the amount of Subcontract Retention that was due for withholding as at the Final Date for Payment for the most recent Payment Notice or Pay Less Notice that has been uploaded to the online portal.
4.10 Our assessment of the Subcontract Retention under Rules 4.6 and 4.9 and the associated change to the portions of the Tier 1 Retention that we hold on trust for the Contractor and the Subcontractor will take effect the day after the Final Date for Payment associated with the Subcontract Payment Notice or Pay Less Notice (as the case may be) that we have used to update our assessment, or if later, the date on which we make our assessment.
4.11 Our assessment of the amount of Subcontract Retention withheld at any given time will be based solely on the amount of Subcontract Retention that is stated to be required to be withheld in the most recent Payment Notice or Pay Less Notice uploaded to the online portal in respect of the Subcontract. We will not be responsible for checking that the Subcontract Retention amount stated on any such notice has been correctly calculated or is properly required or permitted to be withheld.
4.12 If the most recent Payment Notice or Pay Less Notice uploaded to the online portal does not state the amount required to be withheld as Subcontract Retention, our assessment will be taken from the most recently uploaded document, if any, that does set out the amount required to be withheld.
4.13 If at any time the portion of the Tier 1 Retention that is held on trust for the Contractor is insufficient to cover the Subcontract Retention due for withholding under the Subcontract, we will notify the Contractor of the shortfall within two Business Days. The Contractor must deposit sufficient additional cash in the Tier 1 Contract Account to make up the shortfall within five Business Days of receipt of our notification.
4.14 Contractors can check via the online portal:
4.14.1 The total value of the Tier 1 Retention;
4.14.2 How much additional cash the Contractor has contributed to the related Subcontract Accounts (if any); and
4.14.3 The current allocation of the Tier 1 Retention between the Tier 1 Contractor and each associated Subcontract Account (if any).
4.15 Subcontractors can check via the online portal how much Subcontract Retention we hold on trust for them.
Release of Retention Funds
4.16 Upon the satisfaction of the conditions stated in the Contract for the release of all or part of the Retention, the Subcontractor must notify us using the relevant procedure in the online portal. The Subcontractor will certify to us in writing:
4.16.1 That the conditions for either a full or partial release of the Subcontract Retention, as specified in the Contract, have been satisfied;
4.16.2 The cash value of the Subcontract Retention that is due to be released;
4.16.3 In respect of those matters set out in Rules 4.16.1 and 4.16.2, the notice or certificate issued by or on behalf of the Employer demonstrating the same; and
4.16.4 Bank account details to which the Subcontract Retention release should be sent. (a “Subcontract Release Notice”)
4.17 Upon receipt of a properly completed Subcontract Release Notice, we will notify the Contractor that a Subcontract Release Notice has been received in respect of the Subcontract Account, and provide a copy.
4.18 The Contractor shall pay to the Subcontractor via bank transfer to the account details stated in the Subcontract Release Notice the amount of the Subcontract Retention stated as due for release in the Subcontract Release Notice within five Business Days of receipt of our notification under Rule 4.17, unless before the expiry of that five Business Day period:
4.18.1 The Subcontractor withdraws its Subcontract Release Notice; or
4.18.2 The Contractor certifies to us in writing that it disputes the Subcontractor’s entitlement to the release of the amount of the Subcontract Retention stated in the Subcontract Release Notice.
4.19 As soon as possible after making the payment to the Subcontractor as required under Rule 4.18, the Contractor shall upload via the online portal suitable evidence to confirm that the necessary payment has been made.
4.20 We will review any evidence uploaded by the Contractor within two Business Days of receipt. Once we have checked that, in our opinion, the evidence demonstrates that the required payment has been made, beneficial ownership of an amount of the Subcontract Retention equal to the sum paid by the Contractor in satisfaction of the Release Notice under Rule 4.18 will transfer back to the Contractor from the Subcontractor, and we will thereafter hold the affected portion of the Subcontract Retention once more on trust for the Contractor within the relevant Tier 1 Contract Account.
4.21 In the event of a dispute under Rule 4.18.2, we will continue to hold the Subcontract Retention on trust for the Subcontractor until:
4.21.1 We receive written notification from the Subcontractor that it releases its claim to part or all of the Subcontract Retention; or
4.21.2 The Contractor uploads suitable evidence to the online portal to confirm that the amount of Subcontract Retention stated as due for release in the Subcontract Release Notice has been paid to the Subcontractor. We will respond to any such evidence in accordance with Rule 4.20.
4.22 If the Subcontractor gives us notice under Rule 4.21.1:
4.22.1 If the notice releases the Subcontractor’s claim over the whole of the Subcontract Retention, then upon our receipt of the notice beneficial ownership of the whole of the Subcontract Retention will pass back to the Contractor from the Subcontractor.
4.22.2 If the notice releases the Subcontractor’s claim over part only of the Subcontract Retention, then upon our receipt of the notice beneficial ownership of that part of the Subcontract Retention will pass back to the Contractor from the Subcontractor. The Subcontractor will have to submit a further Subcontract Release Notice in respect of the remainder of the Subcontract Retention.
4.23 If the amount of the Retention transferred back to the Contractor under Rules 4.20 or 4.22 represents the entirety of the remaining Retention in the Subcontract Account, then following the transfer of beneficial ownership back to the Contractor, we will close the Subcontract Account and the Subcontract will be discharged from the Scheme.
4.24 If any amounts have been deposited by the Contractor into the Tier 1 Contract Account in compliance with Rule 4.13, these will be returned to the Contractor within two Business Days of the discharge of the relevant Subcontract from the Scheme.
Our liabilities and obligations with regard to the release of retention funds
4.25 In respect of any releases of Subcontract Retention that we are required to enact under this Rule 4:
4.25.1 We will be entitled to rely without enquiry on any Subcontract Release Notice that is validly submitted through our online portal;
4.25.2 Without limiting Rule 4.25.1, we will not be responsible for ascertaining:
(a) Whether the amount of Subcontract Retention stated within the Subcontract Release Notice as due for release has been correctly calculated, or is properly due for release under the terms of the relevant Contract; or
(b) Whether the issue of the Subcontract Release Notice has been validly authorised on behalf of the party submitting it.
4.25.3 We will have no liability to any party for transferring beneficial ownership of funds from a Subcontract Account, even if the person to who we transferred beneficial ownership to was not entitled to receive it under the terms of the Subcontract, provided that we have acted in accordance with these Rules;
4.25.4 In carrying out our responsibilities under this section, save to the extent that such liability cannot be disclaimed, we will have no liability, and will not be responsible for:
(a) Confirming that any bank account details you provide to us are correct;
(b) Any delay or failure on the part of the Deposit Bank with which the Subcontract Account is deposited in receiving or executing our instructions;
(c) Any loss or damage suffered by any person in connection with any fraud, negligence, default or other act or omission on the part of the Deposit Bank or (except to the extent directly resulting from our fraud or wilful default, or that of our directors, servants or agents) any other person; or
(d) Any loss or damage suffered by any person as a result of the Insolvency or any analogous event in the United Kingdom or any other jurisdiction relating to the Deposit Bank or any other person.