Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): scheme overview: CIS - from 6 April 2007 - payments to a third party
COG909270 gives an overview of payments to a third party and explains what a debt factor is.
COG909580 provides guidance on when payments are made to a third party up to 05-04-07.
When a subcontractor has nominated a third party to receive payments the caseworker should
- establish who the third party is.
If the third party is someone other than a debt factor the caseworker should
establish whether the contractor has verified
- the subcontractor
- the nominee.
If the contractor has
- verified the subcontractor and third party and
- both are registered for gross payment
the payment can be made gross.
In all other situations the contractor must make a deduction from the payment at the rate applicable to the subcontractor and the contractor must provide the subcontractor with a pay statement. COG910050.
If the third party is a debt factor the contractor should make the payment as if it were being made direct to the subcontractor. For example if the subcontractor is
- registered for gross payment the payment should be made gross
- registered for payment under deduction the payment should be made after deduction
- unmatched the payment should be made after deduction at the higher rate.
Whenever a deduction is made from the payment the contractor must issue the subcontractor with a pay statement. COG910050.
If an inaccuracy is discovered where payment has been made to a third party the caseworker should
- follow the guidance at COG910070.
If payments under CIS up to 05-04-07 were being made to a third party the caseworker should
- follow the guidance at COG909580.