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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: turnover test: checking related materials figures

CISR44000 Information contents

Note that this check will generally be carried out together with the check of turnoverdescribed at CISR44650. Note also that the aim in this area isto determine whether the materials entry is understated in order to inflate theapplicant’s apparent net turnover.

  1. Examine information available from HMRC systems to form a view as to whether the materials figure entered on the application form is consistent with historical levels (adjusting proportionally for any increase in turnover that has been authenticated). If you conclude that materials figure included in the application is consistent with historical levels, you may accept that the materials entry is substantiated. Otherwise, proceed to Step 2.

  2. Examine information available from HMRC systems to form a view of the likely true level of materials expenditure associated with construction payments arising in the qualifying period.

  3. Write to the applicant saying that their application has been selected for a check and asking that they substantiate the application form entries by submitting:

* 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
  1. On receiving a reply, examine the evidence supplied critically. If it is satisfactory, you may accept that the materials entry is substantiated. If there is a discrepancy between the evidence supplied and the materials entry but it is not enough to have altered the outcome of the application, you may likewise accept that the entry is substantiated. In this case, issue a letter indicating that you are satisfied. Otherwise, proceed to Step 5.

  2. Write to the applicant saying that you have examined the evidence supplied and that it does not appear to substantiate the figure of materials entered on the application form. It is your intention therefore to cancel the business’s gross payment status.