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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
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Register and maintain subcontractor: business test: bank or building society cheque account

CISR45600 Action guide contents

Detailed examination of this aspect of an application will generally occur as part ofthe post- acceptance check.

The subcontractor’s business must be carried out to a substantial extent by use of a bankor building society cheque account. The information given by the applicant in

  • sections 18 - 20 of the application form CIS302 (for individuals)
  • sections 29 - 31 of the application form CIS304 (for partnerships)
  • sections 24 - 26 of the application form CIS305 (for companies)

should be enough to establish this. In addition, bank account details will be checkedby [the Bank Wizard] as part of initial application handling. Any application that doesnot show details of such a cheque account will automatically fail the business test.

Note that a bank account which is used both for private and business purposes isacceptable under the business test (see Jones v. Lonnen, 54TC714).

A business account is normally a current or cheque account, any case in which it appearsthat the account is a deposit account, or an account with the National Savings Bank,should be referred to a Higher Officer.

You should not normally accept a savings or deposit account as one by means of which thebusiness is carried on ‘to a substantial extent’ (FA2004/SCH11/PARA 2(b)). The exceptionto this might be where there is a business which does not involve much in the way ofpayments made out. For example, the subcontractor does not purchase materials, does nothave employees and does not engage subcontractors.

The Higher Officer may, at their discretion, ask for statements for any account which theapplicant says is a business account. Where you inspect statements, you should beconsidering the question whether the business can be said to be carried on ‘to asubstantial extent’ by means of the account in question.

In partnership cases the account must be one through which the partnership business issubstantially conducted and be in the name of the firm.

The fact that the legislation and this guidance refers to ‘an account’ does not mean thatthe whole of the business must be conducted by means of a single account. It is quiteacceptable that more than one account is used for business purposes.