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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: gross payment or payment under deduction: changing tax treatment from gross to net following a request by the subcontractor

CISR43000 Information contents

This action guide tells you how to change a subcontractor’s tax treatment from gross to net following a request made by the subcontractor and considers the actions you must take in different circumstances. All telephone requests to change tax treatment should be referred to the Contact Centre.

Request by subcontractor to change from gross tax treatment to net tax treatment

  1. Go to [CIS Main Menu]
  2. Confirm the required registration by selecting the relevant box
  3. Select [Request New TT]
  4. This will take you to the ‘Change Subcontractors Tax Treatment’ window.
  5. Select [Change to Net]

You will then be taken to the CIS Main Menu, there will be no confirmation message.

The payment status for the subcontractor will now be changed to net effective immediately, and the contractors that the subcontractor is associated with will be notified of the change of tax treatment by the issue of letters CIS316 (the ‘contact history’ note of the issue of the CIS316 will only appear on the contractor record, and will not appear on the ‘contact history’ for the subcontractor).

Request to change from gross tax treatment to net tax treatment with pending tax treatment request

  • Take action up to point 2 above.

The system will display a prompt saying ‘Tax Treatment Qualification Test Status - Outstanding/Incomplete TTQT’. If the outstanding application is following registration a prompt will appear to tell you that you can override the outstanding application by selecting the [Change to Net] button.

A prompt will appear to confirm that the subcontractor wishes to proceed with the application for net payment status.

The system will cancel the pending request for gross payment status and you should proceed as in steps 4 and 5 above.

Request to change from gross tax treatment to net tax treatment with open appeal

If a subcontractor requests to change their tax treatment from gross to net the system will automatically check if there is an outstanding appeal. If there is then the system will not allow you to proceed with the change but will issue a prompt stating that if the subcontractor wishes to proceed with changing to net tax treatment then they will first have to withdraw their appeal.

If the subcontractor wishes to proceed select the confirmation box.

You will then be presented with a box asking for confirmation that the subcontractor wishes to withdraw their appeal against their tax treatment.

  • Select the confirmation box.

The system will automatically update the status of the subcontractor’s appeal to ‘Withdrawn’. The system will issue confirmation to the subcontractor that the appeal has been withdrawn at their request.

  • Proceed as in point 4 & 5 above.

The system will automatically issue confirmation of the revised tax treatment to the subcontractor on form CIS313.

The system will also automatically inform all contractors who have made payments to the subcontractor during the current tax year and the two previous tax years unless there is an indication that a contractor should not receive notification relating to the given subcontractor.