Register and maintain subcontractor: turnover test: checking related materials figures
|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 materials costs in the qualifying period approximate to the figureentered as the ‘Cost of Materials (not including VAT)’ entry on the application form.Where there is a significant discrepancy, the implication is that materials costs may have been understated in order to increase the business’s apparent net turnover.
Since materials costs will be examined at the same time as construction receipts (see CISR44050) you can use the same resources to judge the accuracy of the application form entry). These are
- 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 operated under net status
- copies of paid invoices for construction work done for customers who are not contractors under CIS
Minor understatements of materials costs that have the effect of increasing NetTurnover by no more than 5% may be overlooked but more substantial discrepancies should be investigated. If you conclude that materials costs were deliberately understated you should consider: