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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: business test: introduction

CISR45600 Action guide contents

This section of the guidance deals with applying the business test tosubcontractor’s seeking registration for gross payment.

Being registered for gross payment entitles a business to receive construction paymentsfree of any CIS deduction. Granting gross payment status to the wrong people can lead toserious tax and NIC losses so it is important that it is only given to genuine businessesthat are directly involved in the construction industry.

The purpose of the business test is to establish that the applicant is carrying on agenuine business and that this business includes carrying out construction operations orproviding labour for such operations.

The business test for individuals, partnerships and companies is defined in thefollowing provisions

  • for individuals, in FA04/SCH11/PARA2, and SI2005/2045 reg 27
  • for partnerships, in FA04/SCH11/PARA6, and SI2005/2045 reg 27
  • for companies, in FA04/SCH11/PARA10, and SI2005/2045 reg 27

These provisions require that

  • the applicant is carrying on a business in the United Kingdom
  • the business consists of, or includes carrying out construction operations, or supplying labour for construction operations
  • the business is, to a substantial extent, carried on by means of an account with a bank

Detailed information about these requirements can be found through the information menuabove. Action guides for carrying out the business test can be reached through the actionmenu above.