CISR44190 - Register and maintain subcontractor: turnover test: inherited receipts test

| CISR44600 | Action guide contents | |—————————————————————————————————–|———————–|

For the application there is statutory provision allowing a new applicant for gross payment status to use turnover earned by another business. These provisions are in SI2005/2045 reg 29(2).

Change in type of concern

Net construction turnover earned in the qualifying period by

  • individuals operating as sole traders that form a partnership to succeed their separate trades
  • an individual that incorporates
  • a partnership that incorporates, the former partners becoming directors/shareholders
  • a company that joins a partnership made up of individuals or companies

may be counted in relation to the concern in which they become a participant as partner, director or shareholder. If these receipts are accepted for the turnover test they should be treated as though they were directly earned by the applicant when applying the rules of the Standard or Alternative tests.

That a company or partnership is seeking or has secured gross payment status on the basis of inherited turnover will generally emerge where

  • it, or its representatives, seek guidance about this provision at the time of application,

or

  • it comes to light in the course of the Post-Acceptance Check that the turnover figure entered on the application form was calculated on this basis

In either case you should substantiate the turnover figures by examining the tax records of the business or businesses that are being superseded to satisfy yourself that

  • turnover ‘inherited’ by the successor business is of the right order
  • the superseded business or businesses have ceased trading or are about to do so

If you find that in the course of a Post-Acceptance Check the applicant is unable to produce acceptable evidence of prospective turnover satisfying this test you should consider:

  • cancelling the applicant’s gross payment status (See CISR43610) for guidance about this
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)