Register and maintain subcontractor: the registration process: register sole trader for gross payment
This action guide explains how to process a first registration application made on form CIS302 by a sole trader. . Before an application can be considered for ‘Gross Payment’ status the applicant must be registered. All successful registrations are automatically given ‘Payment under Deduction’ status whilst their application for ‘Gross payment’ status is pending; this is done to avoid a subcontractor having to suffer deductions under the ‘higher rate’.
- To register a subcontractor for gross payment firstly carry out only Steps 1) to 8) of the Action Guide at CISR42620 – ‘Register Sole Trader for Payment under Deduction.
This will take you to the ‘Turnover’ window.
- In the ‘Turnover Details’ panel
* Enter the figures from * Box 17 of form CIS302 in the ‘Gross Amount of Payments’ field * Box 17(B) of form CIS302 in the ‘Cost of Materials’ field (enter ‘0’ in the field if there is no entry in the form) * Tab to the ‘Net construction turnover’ field and the CIS System will show * the Net construction turnover calculated automatically * whether the calculation results in a ‘Pass’ or ‘Fail’ * Go to Step 3)
- In the ‘Bank Account’ panel
* Enter * the ‘Account Name’ as shown at Box 18 of form CIS302 * the bank ‘Sort code’ as shown at Box 19 of form CIS302 * the ‘Account Number’ as shown at Box 20 of form CIS302 * Select the [Validate] button and the CIS System will show whether the Bank Account details are ‘Valid’ or ‘Invalid’
If you see ‘Valid’ alongside ‘Account valid’ entry
* Go to Step 5)
If you see ‘Invalid’ alongside ‘Account valid’ and the message‘The bank account is not registered in the UK’
* Go to Step 4)
- Where the bank account details appear to be invalid
* Telephone the applicant to explore the reason for the failure
If the Bank account remains invalid or where the Turnover Test has failed, or both, then you should select [Next] and not the [Cancel Gross] button on this window, you will then be presented with a dialogue box which says “Press OK to cancel the application for gross and remain on net”, select [OK] to confirm the declaration for Payment Under Deduction. The system will then automatically write to the customer (CIS308) advising that they are registered for Payment under Deduction but they have failed the application for gross payment status. The reasons for failure will be detailed on the letter.
* Go to Step 8)
If you are satisfied that the bank account exists
* Select the ‘Override’ checkbox * Select the drop-down arrow alongside the ‘Reason for Override’ field * Select the appropriate description * Go to Step 5)
- If both the turnover test was passed and the bank account details are valid, select [Next] you will be taken to the ‘Employment History’ window
* Go to Step 6)
- In the Employment History window
If ‘Yes’ has been selected at box at Box 21 of form CIS302
* Select the ‘Yes’ radio button alongside the question ‘Have you been fully employed or self employed for the last 12 months?’ * Select the [Next] button (this takes you to the ‘Employer Obligations’ window
If ‘No’ has been selected at box at Box 21 of form CIS302
* Select the ‘No’ radio button alongside the question ‘Have you been fully employed or self employed for the last 12 months?’ * Enter the ‘Reason’, ‘Date from’ and ‘Date to’ details as shown on form CIS302 in the matching fields
If the applicant has entered ‘Other’ in any of the ‘Reason’ boxes and provided details in the ‘other’ box.
* Enter this description in the ‘Other’ field(s) * Select the [Next] button
This takes you to the ‘Employer Obligations’ window
Where the applicant has selected “No” at Box 21 but supplied no further details,then you will need to abandon the Registration application by selecting the [Cancel Gross] button, this will take you to the Declaration window where the operator should select the[Cancel] button, this will mean that the subcontractor is registered for payment under deduction, and will then take you back to the CIS Main Menu. You should write to the subcontractor asking for details of their activities over the last 12 months so that Registration for gross payment may continue.
- In the ‘Employer Obligations’ window
If ‘Yes’ has been selected at Box 22 of the form CIS302
* Select the ‘Yes’ radio button alongside the question ‘Are you an employer?’ * Enter the ‘Employer PAYE’ reference(s) quoted by the applicant in the matching ‘AO Ref’ fields in the window
it is not necessary to enter the references of any contractor schemes that the applicant has, as CIS Reform will automatically know these, so the PAYE references to be entered here are those that are strictly PAYE only.
* Select the [Next] button
If ‘No’ has been selected at Box 22 of the form CIS302
* Select the ‘No’ radio button alongside the question ‘Are you an employer?’ * Select the [Next] button * This takes you to the ‘Declaration’ window.
- In the ‘Declaration’ window
* Select the check box at the top right-hand corner of the panel * Select [OK] this will take you back to the CIS Main Menu
You should check again that the declaration has been signed before selecting the confirmation box at the top right of the window. If the application is being made by paper, the application form must be signed by the subcontractor, it cannot be signed by aTax adviser on the subcontractor’s behalf.
Note that the wording on the ‘Declaration’ window differs between applications for net payment status, and applications for gross payments status.
In the unlikely event that the subcontractor refuses to make the declaration required that the information given above is correct, you will need to select [Cancel] on this window which will take you back to the CIS Main Menu, the subcontractor should be advised that they have not been registered, and that any payments made will be subject to a deduction.This deduction will be at the higher rate if the subcontractor has not already previously registered for payment under deduction.
- If you selected the checkbox ‘Have you been paid by a contractor since 6 April 2007?’ at Step 8 of CISR42620 (Register Sole Trader for Payment under Deduction) for you will see a warning ‘Please remember to search for unmatched verifications’.
* Select the [OK] button this will take you back to the CIS Main Menu. * Carry out the ‘Update Unmatched Verifications’ procedure
- Put the form CIS302 away in the folder CIS31, see CISR18020 regarding maintaining internal records.
You will be presented with a dialog advising that the system will run a TTQT(Compliance Test). Once complete the system will notify the applicant of the outcome of the gross payment application. The system will record if the application has been successful. Where the application has failed the system will record all reasons for failure. The applicant will receive form CIS308 detailing all the reasons why the gross payment application has failed.
If the contact requires you to carry out further Registrations, then select the [NewCustomer] button, if however they do not then if you select the [End Contact] button thiswill take you back to the Identify Customer window. When selecting the [New Customer] button a message is displayed stating “Click on the [New Customer] button again if a new customer is to be retrieved within the same contact”, this message is merely to confirm that you wish to view another customers CIS record within the same contact. If you do not then you should select the [End Contact] button instead.