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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: turnover test: incidental receipts test

CISR44600 Action guide contents

Under SI2005/2045 reg 31, HMRC can treat a sole trader, partnership or company assatisfying the turnover test if the applicant meets the following conditions

  • the applicant’s business does not mainly consist of carrying out construction operations
  • in the 12 months preceding the date of application the applicant’s total turnover exceeded the relevant turnover threshold for that class of business
  • in the year following the application, the applicant is likely to receive relevant payments in connection with construction operations which are incidental to the main business of the applicant.

The intention of this provision is to assist substantial businesses outside themainstream of the construction industry whose contracts are occasionally or incidentallyaffected by CIS. This might happen, for instance, to a manufacturer and supplier ofindustrial plant. If this business occasionally arranges for the installation of itsproducts, these ‘supply and fix’ contracts may be subject to CIS. The overall commercialturnover of the business may far exceed the level required to satisfy the Standard orAlternative turnover tests but because its ‘construction’ turnover is limited, it may failthose tests. This provision provides a basis for such businesses to satisfy the turnovertest.

In considering an application on this basis you should satisfy yourself that

  • the applicant’s business is outside the mainstream construction industry
  • its general commercial turnover exceeds the net turnover threshold applicable to that business if it were within the mainstream construction industry
  • there is evidence that the applicant has been caught by CIS in the past, or the applicant provides evidence of a current commitment some aspect of which is within the scope of CIS