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HMRC internal manual

Construction Industry Scheme Reform Manual

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HM Revenue & Customs
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Register and maintain subcontractor: gross payment or payment under deduction: turnover test failures

CISR43600 Action guide contents
   

In order to be granted gross payment status the applicant has to prove that the business meets the requirements of the turnover test. An individual must be able to illustrate a net construction turnover of at least £30,000 in the 12 months preceding the date of application. For a partnership or company application this figure is multiplied by the number of partners or ‘relevant persons’ in the 12 month period preceding the application. Alternatively a business that has a net construction turnover of £200,000 or more meets the requirements of the alternative turnover test irrespective of the number of partners or ‘relevant persons’. See CISR44000 onwards for more details on turnover tests.

The ‘Net Construction Turnover’ figure is calculated by taking the Gross UK Construction Turnover less the direct cost of material used to earn that turnover. The Gross UK Construction Turnover should be exclusive of VAT.

An applicant that has failed to meet the requirements of the turnover test will be advised on form CIS308. The form will detail the figures used for the turnover test calculation as shown on the registration form and will provide details of the level of Net Construction turnover needed to satisfy the turnover test.