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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: subcontractors: business taken over by another subcontractor

Where there is a change in the type of concern, for example, where a business previously run by an individual is taken over by a partnership or company, the existing CIS registration cannot be used for the new business.

For example, where a sole trader or partnership becomes a company or a partnership becomes a sole trader, a new business is created which will need a CIS registration.

Use the links below to view the specific details for cases involving changes in the type of concern and applications for gross payment:

CISR43210 Sole traders or partnerships becoming companies
CISR43220 Sole traders becoming partnerships
CISR43230 Two or more sole traders or partnerships merging to form new partnerships

In all such cases, the subcontractor will have to register the new businesses and make a fresh application for gross payment status if that was the status previously held. (For details of how to apply the turnover test, see CISR44000).

To receive payments under the Scheme without having deductions made at the higher rate, the new business must register for CIS and apply either for gross payment or payment under deduction at the standard rate.

Similarly, if an individual takes over as sole proprietor of a business having previously been a partner or director, they must register again for CIS as any previous registration by a partner or director of the old business will no longer be valid.