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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
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Register and maintain subcontractor: Finalising an ‘Incomplete’ scheduled review TTQT - Sole traders

CISR49000 Information contents

Before finalising an ‘incomplete’ scheduled review TTQT for a sole trader you first need to give the subcontractor an opportunity to show that they had a ‘reasonable excuse’ (CISR81020) for the failures identified by the scheduled review, and that the identified failures have been remedied without unreasonable delay after the ‘reasonable excuse’ came to an end. To take the necessary steps, you should

  • send a letter to the sole trader saying that HMRC’s records show that the ‘Compliance Test’ (FA04/Sch 11 para 4(1)) is going to fail, with a copy of the letter being sent to their authorised agent
  • outline the failures identified by the TTQT in the letter
  • ask the subcontractor if they have a ‘reasonable excuse’ for these failures (FA04/Sch 11 para 4(4)) before we make the decision as to whether or not to proceed.

The sole trader must also show you that there is a ‘reason to expect’ that they will comply in respect of their obligations after the end of the ‘qualifying period’ (FA04/Sch 11 para 7).

  • The letter should say that a response should be made within 30 days, otherwise HMRC will proceed to make the determination to withdraw gross payment status.

If, after 30, days no response is received, take the action under ‘Reasonable Excuse not accepted’ below.

If a reply is received, you should consider the ‘Reasonable excuse’ being offered as the reason why the subcontractor had not met their compliance obligation(s), and decide whether you can accept this or not.

‘Reasonable excuse’ accepted

If the ‘Reasonable excuse’ is accepted for all the identified failures;

  • update the failure(s) to ‘Not Active’, using the function ‘Manage TTQT’. The TTQT will then ‘Pass’.
  • send a letter to the sole trader saying that their ‘Reasonable Excuse’ has been accepted and that gross payment status will continue until the next annual review.

‘Reasonable excuse’ not accepted

If the ‘Reasonable excuse’ is not accepted, or no reply is received to your letter or the response is not clear enough to be able to make an instant decision one way or the other before finalising or confirming the TTQT

  • look at the failures identified and check to see whether any of the failures now fall more than 12 months from today’s date.

If this is the case;

  • make these specific failures ‘Not Active’.

If that now means that the TTQT ‘passes’;

  • issue a letter to the sole trader saying that whilst you do not accept that they had a ‘reasonable excuse’ for the failures, upon consideration you have decided to allow gross payment status to continue until the next annual review.

Scheduled Review TTQT still fails

If, however, the TTQT still fails, having made the obligations that became due more than 12 months from today’s date ‘Not Active’,

  • finalize and confirm the TTQT as a ‘fail’ using the function ‘Manage TTQT’
  • send a letter to the sole trader stating that following your earlier letter a formal Determination will shortly be issued withdrawing Gross payment status.

The TTQT is then finalised and a CIS308 is issued to the sole trader and authorised agent (where applicable).

The sole trader then has 30 days after the notice of cancellation of gross payment status in which to lodge an appeal against the determination (FA04/s67).

If an appeal is made by the sole trader, you should work this in line with the guidance at CISR48000.