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HMRC internal manual

Compliance Operational Guidance

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HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): gross payment registration - compliance failures identified at compliance check

COG909145 provided some information on the scheduled TTQT review. A scheduled TTQT review would potentially identify failures that would give rise to the automated withdrawal of Gross Payment Registration process to be activated. This is run by the CIS system and a notice of withdrawal (CIS308) is automatically issued to the subcontractor detailing the reason or reasons for the withdrawal.

CIS Centre, Newry, for individuals and partnership subcontractors or, CT Operations - CIS, Hull, for limited company subcontractors, will deal with any response / appeals.

When conducting your check of the contractor you may also identify compliance failures which would not be identified as part of the scheduled review (TTQT).

For example

  • Failure to include payments made to subcontractor as payments that fall within the Construction Industry Scheme.
  • Failure to include on a monthly CIS300 contractor return details of all payments made to and any deductions from every subcontractor engaged during the period covered by the return.
  • Failures in operating PAYE/NIC which are not apparent from P35 employer returns (up to and including 2012-13).
  • Failures in operating PAYE/NIC which are not apparent from a Full Payment Submission (FPS) or an Employer Payment Summary (EPS), from 6 April 2013.
  • Failure to pay over at the correct time and/or in the correct amounts PAYE/NIC/CIS deductions.
  • Treating workers as self-employed when the correct employment status is employed.

Compliance failures such as these will have a bearing on whether the subcontractor still satisfies the conditions of the Compliance Test and may lead to withdrawal of gross payment registration from the subcontractor FA04/S66.

Where you do not identify any compliance failures and the information only TTQT shows a pass you should:

  • provide advice to the subcontractor about the potential impact any future failures to comply with their obligations may have on their registration for gross payment
  • remind the subcontractor that there is an annual scheduled review.

You should not get drawn into any discussions as to when the automatic TTQT will be carried out. It is sufficient to advise that this will be at least once in any 12-month period.

Where you do not identify any compliance failures and the information only TTQT shows a fail you should:

  • provide guidance for the future
  • provide advice to the subcontractor about the potential impact any failures to comply with their obligations may have on their registration for gross payment
  • remind the subcontractor that there is an annual scheduled review.

You should not get drawn into any discussions as to the reasons for any ongoing automated withdrawal process following the scheduled TTQT other than to advise that if an appeal has not already been lodged to do so as indicated on the CIS308 withdrawal notice.

Where failures are identified during the compliance check you must consider whether the failures have occurred in the immediate prior 12 months (the qualifying period) prior to the date of your check.

If the compliance failures have occurred within the qualifying period you should run a further ‘information only’ TTQT (COG909150) to confirm the latest position regarding any automated failures that may have been identified since the initial TTQT.

At this point you will have a full picture of any TTQT and your compliance failures and one of the following scenarios to consider:

  • The information only TTQT failed and you have identified compliance failures during your check.
  • The information only TTQT passed but you have identified compliance failures during your check.

You must now consider whether the compliance failures you have identified warrant the removal of Gross Payment Registration as provided by FA04/S66 (1) or (3).

Note:

FA04/S66 (1) allows for the Gross Payment Registration to be removed at the end of 90 day notice period FA04/S66 (9) from the date of the determination to withdraw.

FA04/S66 (3) allows for immediate withdrawal FA04/S66 (4) if you have reasonable grounds that

  • the registration was obtained using false information
  • has fraudulently made an incorrect return or provided incorrect information either as a contractor or subcontractor
  • has knowingly failed as a contractor or subcontractor to comply with any such provision.

Role of the Functional Lead Team - CIS Technical Support

The removal of Gross Payment Registration in respect of compliance failures is authorised by the Functional Lead Team CIS Technical Support.

Withdrawal (90 day):

As soon as the compliance failures have been established you must contact a member of the Functional Lead Team CIS Technical Support prior to any referral for advice on whether withdrawal is appropriate in your case.

Withdrawal (Immediate):

Contact the Functional Lead Team CIS Technical Support immediately you establish reasonable grounds for immediate withdrawal, for advice.

If advice is received, confirming withdrawal is appropriate the referral process to be followed for authorisation is at COG909160.

You need to make sure that the subcontractor is aware that gross payment registration will be referred for consideration for it to be withdrawn.

As withdrawal is appropriate liaison with the team dealing with any automated TTQT withdrawal process/appeal at CIS Centre Newry (individuals and partnerships) or CT Operations - CIS, Hull (Limited Company) will now be needed to coordinate action.

COG909100 advised the need to have already set the ECR indicator on the contractor’s CIS screen showing details of the start date and contact details of the CI Caseworker. This indicator also prompts Newry and Hull to contact the CI Caseworker.

If advice is received that withdrawal is not appropriate you should:

  • Provide guidance for the future.
  • Provide advice to the subcontractor about the potential impact any failures to comply with their obligations may have on their registration for gross payment.
  • Remind the subcontractor that there is an annual scheduled review.
  • Proceed to work the case towards settlement.