Register and maintain subcontractor: Tax Treatment Qualification Test (TTQT) - Employer tax debts
|CISR43600||Action guide contents|
The Tax Treatment Qualification Test (TTQT) will as part of its review, test whether the subcontractor where they act as an employer / contractor made their payments / returns on time. Up until 5 April 2014, TTQT will continue to check BROCS for details of payments of Tax / NICs paid over to HMRC by the subcontractor where they also act as an employer / contractor. From 6 April 2014, TTQT will check the new Enterprise Tax Management Platform (ETMP) only for details of payments of Tax / NICs paid over to HMRC by the subcontractor where they also act as an employer / contractor.
When testing whether payments have been made on time, some special situations may arise as detailed below.
Employer / contractor obligations falling due in the 2013/14 tax year
From 6 April 2013 all payments made by an employer / contractor will be held on ETMP only. TTQT looks back for obligations falling due in the last 12 months (the ‘qualifying period’), as we move into the 2013/14 tax year TTQT will still be looking for obligations relating to employer / contractor payments on BROCS only it will not be able to see the obligations that have become due from 19 April 2013 (22 April 2013 if the employer / contractor pays electronically) that are now recorded on ETMP.
TTQT will therefore (after checking all other areas) produce an ‘Incomplete’ TTQT result. You will therefore need to check ETMP manually using ‘ETMP View’ that the employer /contractor obligations falling due from 19 April 2013 (and that also fall within the TTQT ‘qualifying period’) have been made on time. Where you identify late payments of employer / contractor obligations on ETMP these should be added to the TTQT results found using the guidance in CISR43600 to do so.
Months 12 and 13 employer payments due
Up until 23 November 2009, any TTQT run either at Registration, scheduled review, ‘Ad-hoc’ or ‘Information only’, would have identified any late or outstanding payments as an employer or contractor for all months (including months 12 and 13) during the ‘qualifying period’. From 23 November 2009 until 5 April 2014, TTQT ignored any failures at months 12 and 13 that have been paid by 19 or 22 July for the purposes of determining whether the TTQT is a ‘Pass’ or a ‘Fail’. This is because TTQT cannot automatically identify the correct due date of any payments made in respect of Class 1A NIC which falls due by 19 or 22 July each year (depending on the method of payment).
From 6 April 2014, TTQT will be testing for all employer / contractor payments due for months 1 to 12 (inclusive) although TTQT will continue not to test for payments of Class 1A NIC which falls due by 19 or 22 July (Month 13 payments).
However, the fact that TTQT now ignores these obligations does not mean, for the purposes of the Compliance Test, that these obligations cannot be brought into account in any manual Compliance Test undertaken. Any late payments identified manually at months 12 and 13 in respect of PAYE paid later than 19 or 22 April may still be taken into consideration.
Quarterly payment cases
When TTQT runs and the system checks the payments made by the subcontractor in their capacity as a contractor / employer who pays quarterly, the system will only check for payments made on time in months 3, 6, 9 and 12. Where the contractor has made quarterly payments but incorrectly used payslips intended for other months such as 1, 2, 3 and 4 (for example), the automated TTQT will fail as there are no payments in months 6, 9, 12 and Month 3 appears to be paid late.
When carrying out a manual TTQT check or as a result of an appeal submitted by the subcontractor, if it is obvious that this is what has happened you may amend the automated TTQT result where you are satisfied that it should have passed, or uphold any appeal made in favour of the subcontractor.