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HMRC internal manual

Construction Industry Scheme Reform Manual

From
HM Revenue & Customs
Updated
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The Scheme: miscellaneous: notification of sole-trader’s bankruptcy

CISR18000 Information contents
   

Notification of sole trader’s bankruptcyThis action guide explains the steps you should take when you are notified that a bankruptcy order has been made for someone operating as a subcontractor and/or contractor within the Construction Industry Scheme. It is set out for the three different roles an individual may have under the Scheme. The taxpayer may fulfil any or more than one of these roles:

  • Subcontractors holding gross payment status
  • Subcontractors being paid under deduction
  • Contractors

Subcontractor holding gross payment status

  • Write to the trustee in bankruptcy asking whether trading has ceased.
  • Keep a copy of the letter in the CIS31 folder and place the file on BF for a response.
  • If trading has ceased

    • and you have access to the SA system, enter details of the insolvency reference and the date on the taxpayer’s SA record using the function Amend Taxpayer Signals following the guidance in the Self-Assessment Manual (SAM) at SAM106000.
    • using the function ‘Maintain Sources’ (again within SA) note that the trade has ceased and the date of cessation on the taxpayers record. (For further guidance refer to the Self-Assessment Manual at SAM106000).
    • if you do not have access to the SA system you should send an email to the subcontractors processing office advising them of details of the bankruptcy and the date trading ceased.
  • If trading continues

    • delete the NINO on the taxpayer’s SA record and set up a new SA record and file following the guidance in the Self-Assessment Manual at SAM106000.
    • cross-reference the old and new taxpayer files with notes on their covers
    • examine the taxpayer’s affairs to ensure that gross payment status should be continued. If HMRC arrears are evident and fall within the qualifying period the compliance test should be carried out to see whether the gross payment status should be cancelled.

Subcontractors being paid under deduction

  • Write to the trustee in bankruptcy asking whether trading has ceased.
  • Keep a copy of the letter in the CIS31 folder and put the file on BF for a response.
  • If trading has ceased

    • and you have access to the SA system, enter details of the insolvency reference and the date on the taxpayer’s SA record using the function Amend Taxpayer Signals following the guidance in the Self-Assessment Manual at SAM106000).
    • using the function ‘Maintain Sources’ (again within SA) note that the trade has ceased and the date of cessation on the taxpayers record. (For further guidance refer to the Self-Assessment Manual at SAM106000).
    • if you do not have access to the SA system you should send an email to the subcontractors processing office advising them of details of the bankruptcy and the date trading ceased.
  • If trading continues, proceed as follows

    • delete the NINO on the taxpayer’s SA record and set up a new SA record following the guidance in SAM at SAM106000
    • cross-reference the old and new taxpayer files with notes on their covers

Contractor

  • Write to the trustee in bankruptcy asking whether trading has ceased.
  • Keep a copy of the letter in the CIS31 folder and put the file on BF for a response.
  • If trading has ceased send details of the bankruptcy and cessation details to the Employers Section for them to update Employer Business Service (EBS).
  • If trading continues

    • delete the NINO on the taxpayer’s old SA record and set up a new SA record following the guidance in SAM at SAM106000
    • set the CIS Signal on the new SA record
    • add the NINO to the new SA record and set the CIS ‘NINO Verified’ signal to ‘Y’ once this has carried over to the CIS record.
    • cross-reference the old and new taxpayer files with notes on their covers.