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HMRC internal manual

Construction Industry Scheme Reform Manual

Register and maintain subcontractor: compliance test: making a s64(5) direction

CISR46000 Information contents

This action guide explains how to make a s64(5) direction. For guidance on the circumstances where you should do so, see CISR46110 for the associated information page

  • Write to the company secretary along the lines of the letter below, leaving out or replacing the words in square brackets as appropriate.

    “Under powers delegated to me by the Board of HM Revenue & Customs I directed that, in considering the recent application for Gross Payment within the Construction Industry Scheme, the conditions set out in Section 64(5) Finance Act 2004 shall be applied to the directors of the company, including the following individuals:-

    (List all directors as shown on the application form) (and to the beneficial holders of shares in the company including the following individuals:-] [List all the beneficial shareholders shown on the application form).

    If, for any reason, including a change in the directorships [or the beneficial ownership of shares]

  1. any of the above named individuals are not now directors of [or the beneficial owners of shares in] the company; or
  2. individuals not named above are now directors of [or, in the case of a close company, are beneficial owners of shares in] the company;
please let me have the relevant details.  

To enable me to disclose to the company the exact reason for the compliance failure will you please arrange for each director [and each beneficial shareholder] to complete the enclosed authority. Please also supply a written authority in the same form for any director [or shareholder] not named above. These forms of authority should be returned to me as soon as possible. Full consideration of the company's appeal cannot be completed until I have received them all.”  
  • Delete the references to beneficial shareholders on an appropriate number of forms CIS325 where the company is not close.
  • Send the letter and the forms CIS325 to the company’s registered address.

If, at the BF date, forms CIS325 still have not been received, you should write to each director / shareholder to whom the failures identified relate and set out the precise failures identified for them as part of the Compliance test for the company.

At the same time, you will need to write to the appellant sending a decision letter upholding the appeal in favour of HMRC, saying that you are not able to disclose the specific failures as they relate to a director / shareholder and that the individual concerned has not yet sent back the necessary authority to disclose that information.

When you receive the completed forms CIS325, you should consider the applicant company’s suitability for gross payment, see the guidance at CISR43700 relating to this.