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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
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Register and maintain subcontractor: turnover test: checking gross turnover


CISR44600 Action guide contents

This check is carried out as part of the post-acceptance check described in CISR44040. The check will be made after the application acceptance and assignment of gross payment status. Its object is to verify that the applicant’s actual construction turnover in the qualifying period equalled or exceeded the figure entered as the ‘Gross amount of payments (not including VAT)’ on the application form.

Since the qualifying period during which the turnover was generated ends on the day preceding the application date, it is unlikely that an SA or CT return covering that period will be available when the check is carried out. However, other HMRC information resources that can be used for this check are

  • the old CIS System — this will remain accessible for read-only purposes for a period following the introduction of CIS Reform on 6 April 2007. That system may hold details of voucher transactions within the qualifying period
  • the Data Warehouse recording payments posted to the applicant’s record after submission of monthly returns by contractors

Where you are unable to verify the construction turnover figure using HMRC Systems you will have to approach the applicant for evidence. Depending on the size and complexity of the applicant’s business, and when the check is carried out, the forms of evidence sought may include:

  • copies of old-style CIS vouchers (where these transactions fall within the qualifying period but it is suspected that the HMRC record is incomplete)
  • copies of CIS deduction statements supplied by contractors while the applicant has held net payment status
  • copies of paid invoices for construction work done for customers who are not contractors under CIS
  • bank statements recording relevant transactions

If the applicant is a business of some size and complexity it is unlikely that payments information derived from HMRC Systems or the applicant themselves at a later date will exactly match the figure on the application. Minor discrepancies of no more than 5% below the qualifying threshold may be overlooked. More substantial discrepancies should be investigated and if you conclude that construction receipts were deliberately overstated you should consider:

  • cancelling the applicant’s gross payment status (See CISR43610) for guidance about this.
  • submitting the case to CIS Advisory Team (See CISR97030) to consider penalty proceedings.