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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: gross payment or payment under deduction: No Compliance History cases

CISR43600  Action guide contents

‘No History’ cases with a National Insurance Number (NINO)

Where a new subcontractor registers for gross tax treatment, CIS will run the Tax Treatment Qualification Test (TTQT) see CISR43070. However where the system indicates ‘‘No SA Returns due’’ for a test participant, (sole trader, partner, director or shareholder) this application will be passed to the ‘‘Complete TTQT Manually’’ worklist for a manual TTQT check to be undertaken. These ‘Incomplete’ work items will be handled as follows;

Sole Traders or partners in a partnership CIS Centre, Newry
Companies CT CIS Centre, Hull.

When working these you will need to use the ‘‘PAYE Service’’ or ‘‘TBS’’ to trace an employment record for the applicant to check their previous employment history, you should also issue a CIS309 to the applicant asking them to supply evidence to you of the turnover, shown on their registration form.

Form CIS309 is available from the SEES package entitled ‘Emp Comp & Const Ind’. The form asks the applicant to provide evidence to confirm the turnover shown on the application form and can include the following:

  • bank statements
  • paid invoices
  • paid cheques
  • books and accounts of the business

The applicant is given a period of 21 days in which to respond to the CIS309. If the subcontractor is unwilling to put their evidence through the post, then provided that they make an appointment with a mobile adviser at a UK venue of their choice, they will be able to take the evidence to the adviser who will give them a receipt for the evidence produced. The mobile adviser must make a note of the evidence supplied by the subcontractor using the function ‘Record Contact’ (see CISR90270), and then immediately pass that evidence to the section that requested sight of this.

If the evidence of turnover is produced and you are satisfied that this backs up the figures shown on the application, and all other areas of the application are also satisfactory, you will need to finalise the unconfirmed TTQT result as a ‘pass’ by using the ‘Manage TTQT’ function (see the table below). If however no reply is received to the CIS309 and the TTQT has an ‘Unconfirmed’ status, you should finalise the TTQT as a fail result, again using the function ‘Manage TTQT’.

CISR43680 Finalise incomplete Tax Treatment - Sole traders
CISR43690 Finalise incomplete Tax Treatment - Partnerships
CISR43700 Finalise incomplete Tax Treatment - Companies, Unincorporated bodies and Trusts

When using this function you should select the ‘miscellaneous’ fail reason, and then enter in ‘free-format’ a fail reason of ‘Evidence of Turnover not provided as requested’, this text will then appear on the CIS308 when it is issued to the applicant. The applicant will then remain on net payment status.

If the applicant subsequently provides the turnover evidence shortly after the CIS308 has been issued and that evidence is satisfactory, then you should run an ‘Information only’ TTQT (see CISR43160), and if this finds that the applicant passes the Compliance Test, then you should change the tax treatment from net to gross using the function ‘Change TT’ (see CISR43630).

Note: when requesting an ‘Information only’ TTQT, bear in mind that the ‘qualifying period’ will be up to the date the original application for gross payment status was made. Your ‘Information only’ TTQT will however look back 12 months from the date of your request, you should therefore ensure that had the TTQT been run for the 12 months up to the date of the original application that the TTQT result would have been the same.

‘No History’ cases without a National Insurance Number (NINO)

Where a new subcontractor registers for gross tax treatment, an appointment will be made for the applicant to meet with a mobile adviser for an Identity check. The applicant will be asked to take with them evidence to support their turnover as shown on their registration form, and evidence to show that they pass the business test. If the applicant has entered the United Kingdom from abroad they should also be asked to produce evidence to show that they have met all of their taxation obligations in the emigrating country (translated into English) in order to prove that they will also pass the Compliance Test. More information can be found regarding these registration applications in the Action Guide at CISR43640.

Once this information has been obtained and the evidence seen, the registration form should be passed to the CIS Registration Team at the National Insurance Contributions and Employers Office (NICEO) for processing, where you are satisfied with the evidence that the applicant has produced to you which confirms that the Business, Turnover and Compliance Tests are passed. Where you have doubt that any one of these Tests have been passed, you should follow the guidance in the Action Guide at CISR43640.

Where the subcontractor meets with a mobile adviser you should refer to CISR42150 for detailed information to enable you to carry out the Identity checks required.