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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: gross payment or payment under deduction: 'Ad hoc' Tax Treatment Qualification Test (TTQT)

CISR43000 Information contents

As from 15t h October 2007, there is a facility to run a ‘one off’ or what is called an ‘ad-hoc’ Tax Treatment Qualification Test (TTQT). This can be requested where you feel that the subcontractor is not meeting their compliance obligations and yet the annual TTQT is not yet due for sometime.

There are circumstances where an ‘ad-hoc’ TTQT cannot be requested and for details of this see CISR43140 for further information.

To Request an ‘ad-hoc’ TTQT, from the CIS Main menu

  • Select [Manage TTQT]

This will take you to the ‘Tax Treatment Details’ window. Here you will find displayed the following information:

* Current Tax Treatment - Net or Gross
* Tax Treatment under appeal - Yes or No
* Date Next TTQT - The date of the next annual scheduled review of the subcontractor’s tax treatment where gross payment status is held.
* TTQT results pending for - this will show you whether the subcontractor has made a request for gross payment status, for which the result of the TTQT is still pending.
* Request date - this will show the date of the request where the subcontractor has made an application for gross payment status already, for which the result of the TTQT is still pending.

Under the title bar ‘Tax Treatment History’ on this window you will also find displayed

* The start and any end date of a particular type of tax treatment
* The tax treatment either Net or Gross
* The reason that prompted the change in tax treatment, examples are on Registration or Annual (Scheduled) Review.

Finally on this window will be displayed the TTQT History, under this title bar will be displayed

* Date - The date the TTQT was requested.
* Type - This field will usually be blank, unless a previous TTQT came back with the result of 'Incomplete', in which case 'Manual' will appear here to indicate that the previous TTQT was completed manually.
* Result - The result of the TTQT either Pass or Fail.
* Status - The status of the TTQT result either confirmed or unconfirmed.
* Test Type - The type of occasion for which the TTQT was requested, either on first Registration, Request change of Tax Treatment or on Tax Treatment Scheduled Review.

To request an ‘Ad-hoc’ TTQT

  • Select the [Request TTQT] button at the bottom of the window

A message window will then be displayed saying ‘This could potentially result in a change of Tax Treatment, continue? If you wish to continue

  • Select [OK]

The TTQT will now run, and the results should be visible within a few days. Where the result of the ‘ad-hoc’ TTQT is a ‘Fail’ this will be generated on to a ‘Complete TTQT Manually’ Work List.

Note; Before taking action to remove gross payment status from a subcontractor under FA04/s66(1) you must firstly consider whether the subcontractor may have had a ‘reasonable excuse’ for the failures identified, you must therefore work this in line with the guidance at CISR49030.

Where the ‘ad-hoc’ TTQT ‘Fail’ result is confirmed form CIS308 will be issued to the subcontractor advising them of the failures found and their payment status will be changed to Net at a date 90 days after the TTQT was confirmed.

All contractors who have paid or verified the subcontractor within the current or previous two tax years will be advised of the change with these notifications (CIS316) being issued 55 days after the TTQT was confirmed (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).

Note An ‘Ad-hoc’ TTQT should not be requested for an Unincorporated body subcontractor, but instead you should make a request for an ‘Information only’ TTQT (See CISR43660) where you believe that the Unincorporated body is not meeting its Compliance obligations. The results of any ‘Information only’ TTQT should be submitted to the CIS Advisory Team (See CISR97030) with the facts of the case.