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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
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Register and maintain subcontractor: Appeals against refusal or cancellation of Gross Payment Status: Subcontractor claims that suspicious activity has taken place on their Self-Assessment record

CISR48600 Action guide contents

Where a subcontractor either loses or is refused gross payment status following a Tax Treatment Qualification Test (TTQT), and the subcontractor disputes the details on their Self Assessment (SA) record, for example, the amount of repayments claimed or the amount of their Self-Assessment, you should initially check SA notes to see whether this has already been reported to the Self-Assessment Record Protection team.

If this is the case you should inform the customer that you will investigate the matter, and you should contact the Self-Assessment Record Protection team to ascertain the progress of the case.

If however there is no note on SA and you feel that suspicious activity may have taken place on the record, you should send full details to the Self-Assessment Record Protection team, including the fact that currently you have an appeal against a decision to either remove or to grant gross payment status for the Construction Industry Scheme to the subcontractor. This report should be made to a dedicated work area mailbox that can be found in the Global Address List (GAL) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Where the Self-Assessment Record Protection Team confirm that suspicious activity has taken place, and you can now see that the genuine subcontractor had in fact made the payments that they are due to make and fulfilled all of their obligations under the Taxes Acts on time, you may uphold the appeal in favour of the subcontractor and they may retain (or be granted) gross payment status.

You should check to see whether a new Self-Assessment record has been opened following your report, and if it has whether the genuine subcontractor has been registered for CIS using their new Unique Taxpayer reference (UTR). If so, check what payment status has currently been allocated to the subcontractor, if they are shown as being on net payment, you may now allocate gross payment by using the function ‘Change TT’ as described at the bottom of CISR43630 where you are satisfied that the Compliance Test is passed following the report from the Self-Assessment Record Protection team.

Where a new Self-Assessment record has not been opened, you will need to arrange for this to be done and then to register the subcontractor for CIS under the new UTR using the registration details from the old UTR, and allocate gross payment status to the subcontractor on the new record by using the function ‘Change TT’ as described at the bottom of CISR43630. The subcontractor must also be advised to inform their contractor(s) of their new UTR, and that the contractor(s) should re-verify the subcontractor using that new UTR.

Once a new UTR is opened and you have upheld the subcontractors appeal on the old CIS record, you will also need to go back to the CIS record held under the old UTR and use function ‘Change TT’ to change the tax treatment back to Net, this is so that the person now using that record has payments made under deduction at 20% and not under gross payment.

Note; CIS316’s will automatically be issued to the various contractor(s) involved with the old UTR, so the genuine subcontractor will need to have already asked their contractor(s) to re-verify them under their new UTR if they are to avoid having deductions made at 20%.