Register and maintain subcontractor: Finalising an ‘Incomplete’ scheduled review TTQT - Companies
Before finalising an ‘incomplete’ scheduled review TTQT for a company 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 do this, you should,
- send a letter to the Company (in respect of the Company failures only) saying that HMRC’s records show that the ‘Compliance Test’ (FA04/Sch 11 para 12(1)) is going to fail, with a copy of the letter being sent to their authorised agent
- outline in the letter the failures identified by TTQT
- ask the company if they have a ‘reasonable excuse’ for these failures (FA04/Sch 11 para 12(3)) before we make the decision as to whether or not to proceed.
The Company must also show you that there is a ‘reason to expect’ that they will comply in respect of obligations after the ‘qualifying period’ (FA04/Sch 11 para 12(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, you should 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 company 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, you should;
- update the failure(s) to ‘Not Active’ using the function ‘Manage TTQT’. The TTQT will then ‘Pass’
- send a letter to the company saying that their ‘Reasonable Excuse’ has been accepted and that Gross payment status will continue until the next annual scheduled review.
‘Reasonable excuse’ not accepted
If the ‘Reasonable excuse’ is not accepted, or no reply is received 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, you should,
- look at the identified failures and check to see whether any of the obligations shown as failed 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 company 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 company stating that following your earlier letter a formal Determination will shortly be issued withdrawing Gross payment status.
The TTQT is finalised and a CIS308 is issued to the company.
The company 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 company, you should work this in line with the guidance at CISR48000.