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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: compliance test: introduction


CISR46600 Action guide contents

The compliance test is one of the statutory tests a subcontractor must pass to gain gross payment status under CIS. This section of the Guidance covers applying the test, interaction with the CISR system and related issues.

Particular areas covered are




  • how the test is applied at subcontractor registration
  • evidence checks made subsequently (referred to as Post-Acceptance Evidence Checks)
  • explanations of the tests and terms used.

Note that even though an application fails the compliance test, the other statutory tests, the business and turnover tests, must still be carried out. If an appeal is made against refusal of gross status all relevant grounds for refusal must be identified.

Although this section focuses on the compliance test, this test is generally carried out at the same time as the other statutory tests, but the applicant must first pass the business and turnover tests before the compliance test (Tax Treatment Qualifying Test – TTQT) is run.

The legal requirements

The compliance test is defined in the following provisions





  • for individuals, in FA04/SCH11/PART1/PARA4
  • for partnerships, in FA04/SCH11/PART2/PARA8
  • for companies, in FA04/SCH11/PART3/PARA12

The main requirements of the test are that





  • the subcontractor must have complied on time with obligations arising under ICTA88, FA04 and TMA70, and regulations laid down in SI2005/2045 as amended by SI2008/1282 in the qualifying period
  • where the subcontractor was overseas during the qualifying period, they must show that all similar obligations in the country of residence were complied with, or that there were no such obligations
  • for periods following the date of application, HMRC must have reason to expect that the subcontractor will continue to comply with those obligations on time.

The test allows for a limited level of default to be overlooked and this is referred to as the ‘compliance tolerance’. See CISR46080 where the compliance tolerance is described in detail.

In every case in which an applicant for gross payment registration fails to pass the compliance test, and that failure is outside the compliance tolerance mentioned above, you must refuse registration for gross payment.