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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: turnover test: standard test


CISR44600 Action guide contents

To pass this test the applicant must have net construction turnover equal to or exceeding the threshold in the 12 months preceding the date of application.

The threshold depends on the status of the applicant as follows

Individual — the threshold is £30,000

Partnership — the threshold is £30,000 multiplied by the sum of

  • the number of partners that are individuals
  • in relation to each company member of the partnership, the number of ‘relevant persons’ associated with that company

Company — the threshold is £30,000 multiplied by the number of persons that are relevant persons’ in relation to the company (a company’s ‘relevant persons’ are its directors and, if it is ‘close’, any beneficial owners of shares). Note that where aperson is both a director and a shareholder they are only counted once in the calculation.

The turnover achieved by a business cannot be calculated on a pro-rata basis, in other words the applicant cannot say ‘I have earned turnover of £15,000 in the last six months, therefore I pass the turnover test’. Neither can the applicant say that the turnover limit of £30,000 is reduced because they only work part-time, this latter approach was confirmed by the case of HMRC v Smith (EWHC 488/2007). The full monetary amount of £30,000 must be achieved in order for the Turnover test to pass.

For most applications net turnover put forward will be turnover earned by the applicant business in its own right. However, some applicants will seek to pass the test on the basis of

If these receipts are acceptable for the turnover test they should be treated as though directly earned by the applicant when applying the Standard test.