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HMRC internal manual

Construction Industry Scheme Reform Manual


A B C D E F G H I J M N O P R S T U V 


## A {#IDAQHIRF}  
Accounts Office (AO) HMRC office responsible for handling payments made by customers
Accounts Office reference (AO ref) Reference used to identify each BROCS record (employer or contractor scheme).
Appointee A third party who is not an agent but has been appointed by an HMRC customer to act on their behalf. Typically, this may be a family member, friend or business associate of the customer. In all cases HMRC must have evidence of the customer’s consent for the appointee to act.
Agent An agent is authorised by a contractor or a subcontractor to perform certain construction industry scheme tasks on behalf of either the contractor or subcontractor.
Arms-Length Management Organisation (ALMO) A company set up by a local authority to manage or improve all or part of its housing stock. The company is owned and run by the local authority and operates under the terms of a management agreement between the local authority and the ALMO.
Alternative turnover threshold The amount of construction turnover a partnership or company subcontractor needs to show net of relevant materials to pass the alternative turnover test.
Authentication The process by which the identity of the contact being made is confirmed, whether it is by the contractor, the subcontractor or a nominated agent.
## B {#IDAELIRF}  
Bank Wizard A computer facility to verify that a bank account sort code and account number are valid.
Business Review of the Collection Service (BROCS) A computer system recording employer and contractor payments made of liabilities for PAYE, Class 1 National Insurance contributions, and deductions due from self-employed subcontractors for the tax years up to the period ended 5 April 2013.
## C {#IDAPMIRF}  
Call-off Contracts This represents a firm commitment by a contractor to purchase goods or services from a subcontractor over a period of time. A ‘Call Off’, or an ‘Order Off’, type of contract will not be a contract in its own right.
Capacitor A capacitor is someone (or some body) appointed under particular circumstances. For example following Death, Liquidation or Bankruptcy.
Centre for Non-Residents (CNR) Department within HM Revenue & Customs dealing with the tax affairs of businesses and individuals who are not resident within the United Kingdom. CNR is part of CT & VAT.
Citizens Identification Framework (CID) This is a computer database of both current and historic basic personal details held for an individual.
CIS4 A subcontractor’s Registration Card, confirming a subcontractor was registered with the Construction Industry Scheme and allowing the contractor to pay the subcontractor named under deduction. This was used in conjunction with the old Construction Industry Scheme that ran from 1 August 1999 until 5 April 2007.
CIS5 A Construction Tax Certificate issued to certain businesses in connection with the old Construction Industry Scheme, in operation from 1 August 1999 to 5 April 2007. This certificate, which allowed the subcontractor to be paid gross, was not personalised to any individual within the business, and therefore was not required to be presented in person to the contractor.
CIS6 A Subcontractors Tax Certificate issued to businesses in connection with the old Construction Industry Scheme, in operation from 1 August 1999 to 5 April 2007. This certificate, which allowed the subcontractor to be paid gross, was personalised to an individual within the business, and was required to be presented in person by that individual to the contractor.
HMRC Clearing House This is the HMRC department where an appeal made by a customer to the Tribunal Service is notified to HMRC, who will then notify the Tribunal Caseworker responsible for the Tribunal Hearing.
Company Registration Number (CRN) This is a number allocated to a company when it first registers as a United Kingdom company with the registrar of companies.
Construction Industry Scheme (CIS) The taxation scheme applied to contractors and subcontractors working within the construction industry.
Construction operations Operations as defined at section 74 of Finance Act 2004 and described in CIS340, Appendices B and C.
Contact Centre (CC) This is where a Construction Industry Scheme telephone call is handled by HMRC.
Contra Is a charge for goods and services supplied by one party to another.
Contract Is any legally binding agreement under which one person (or body) does work or provides services for another person (or body). A contract includes an agreement made by word of mouth as well as a written document.
Contractor Any of the following:

person(s) or body carrying on a business including construction operations carried out in the United Kingdom or its territorial waters

person (s) or body spending over a certain amount on construction operations carried out in the United Kingdom or its territorial waters

A local authority

A development corporation or new town commission

The Commission for New Towns

The Housing Corporation

A housing association or housing trust

Housing for Wales

Scottish Homes

Northern Ireland Housing Executive.    
  Corporation Tax A type of taxation that applies to the business profits of companies.
  Corporation Tax Self-Assessment (CTSA) The HMRC system by which the collection of Corporation Tax from companies is administered.
  CT41G Form completed by a company when registering as a tax payer for Corporation Tax.
  CWF1 Form completed by a sole trader when registering as a tax payer for Self-Assessment
  ## D {#IDATWIRF}  
  Debt factor A subcontractor may enter into a factoring agreement such that the factor is responsible for collecting the subcontractor’s debts. The factor recovers the debt from the payer (the contractor), retains a portion under the terms of the factoring agreement and pays the balance to the subcontractor.
  Debt Management & Banking (DMB) Department within HM Revenue & Customs responsible for the collection of all forms of taxation of income and national insurance contributions from businesses and individuals.
  Decision letter Letter sent by the decision maker to the appellant setting out their response to the appellants appeal. Where the appellants appeal is rejected, the letter will offer to the appellant an Internal review.
  Decision maker The decision maker is the HMRC officer responsible for the decision that the customer disagrees with, or the HMRC officer who initially considers the appeal made by the customer in connection with that decision.
  Deemed Contractor These are businesses whose main operations do not fall within the construction industry, but because their total spend on “construction operations” exceeds a stipulated amount, they are brought within the Construction Industry Scheme.
  ## E {#IDALZIRF}  
  e-Channel Forms or applications submitted by a customer using a computer terminal over the Internet.
  Electronic Data Interchange (EDI) This describes the process by which contractors can submit their monthly returns through electronic communications. This method of supplying return information is set up and run by the Electronic Business Unit.
  Employer Business Service (EBS) Computer system governing the name, business address and other details of employers.
  Employment Status Indicator (ESI) A tool for use by Contractors and HMRC staff on the HMRC Internet site to help determine the employment status of subcontractors being engaged.
  Enquiry Centre (EC) Local HMRC office where a customer may make an appointment to discuss their taxation affairs.
  Enterprise Tax Management Platform (ETMP) A computer system recording employer and contractor payments made of liabilities for PAYE, Class 1 National Insurance contributions, and deductions due from self-employed subcontractors for tax years from 6 April 2013.
  ## F {#IDAO2IRF}  
  Firm This is used in the technical sense to mean a partnership.
  ## G {#IDAL3IRF}  
  A B C D E F G H I J M N O P R S T U V   
  Status allocated to a subcontractor that permits payments in respect of “construction operations” to be paid to the subcontractor without deduction on account of tax.  
  ## H {#IDAI4IRF}  
  Her Majesty’s Revenue & Customs (HMRC) The government department that has overall responsibility for the Construction Industry Scheme.
  ## I {#IDAF5IRF}  
  Identity Check A check carried out when a subcontractor first registers for CIS with HMRC to confirm the identity of the subcontractor, by the production of certain documents.
  Inactivity Where a contractor intends to make no payments to subcontractors for several consecutive months, they are able to request they be marked as “Inactive”, this will mean that no monthly returns are issued for this period until the contractor states they are once again “active”.
  Individual turnover threshold The amount of construction turnover an individual needs to show net of relevant materials in order to pass the standard turnover test.
  Inland Revenue Personal Reference (IRPR) A temporary reference used when a subcontractor has not yet been allocated a National Insurance Number (NINO).
  Intelligent Character Recognition (ICR) An optical reader that recognises letters and numbers on completed forms and is used by HMRC when capturing monthly returns.
  Internal review An internal review is an HMRC examination of the decision with which the customer disagrees, and is carried out by someone who is outside the management chain of the decision maker.
  ## J {#IDALCJRF}  
  JANE (Joint association no entity) This is where two or more companies work in association on a single project but do not share profits and losses. A JANE does not constitute a partnership and the companies involved do not need to register separately as partners in a new partnership.
  Joint venture These are partnerships / companies formed by two or more companies combining for a specific construction industry project where profits and losses are shared. The companies comprising the new partnership /company retain their individual registrations but also need to register as a new partnership / company.
  ## M {#IDAWDJRF}  
  Minimum Data Set (MDS) This is the minimum criteria that must be present to enable a monthly return to be logged and captured successfully.
  Monthly Return (CIS300) A return required by all contractors showing all payments made to subcontractors during each month to the 5t h of that month, the return being required to be made to HMRC by the 19t h of that month
  Multiple turnover threshold The individual turnover threshold multiplied by the number of partners in a partnership or relevant persons in a company.
  ## N {#IDA3FJRF}  
  National Insurance Contributions & Employer Office (NICEO)  
Department within HMRC that covers all aspects of National Insurance Contributions and PAYE Employer work    
  National Insurance Number (NINO)  
A number allocated to an individual registering to pay National Insurance contributions for the first time.    
  Net Payment status Status allocated to a subcontractor that permits payments in respect of “construction operations” to be paid to the subcontractor under deduction on account of tax either at the standard or higher rate of deduction.
  New Enterprise Support Initiative (NESI) An HMRC helpline and IT system designed to provide new enterprises with help and support to enable them to comply with tax regulations. NESI is often referred to in the context of new employers and contractors opening PAYE schemes.
  Nil Return Is one where there are no payments, cost of materials or deductions reported for any subcontractor within the contractor scheme for the period covered by the contractor return.
  No Reference (NOREF) An abbreviation used by HMRC staff at Netherton where the reference is missing from the monthly return.
  Nominee Is a person appointed by a subcontractor to receive a payment on his or her behalf from a contractor. Verification of the payment status of both the subcontractor and the nominee is required in these cases.
  ## O {#IDATJJRF}  
  Operational Support Staff (OS Staff) A small unit of HMRC staff based at Netherton and involved with the logging and capturing of contractor monthly returns.
  Organisational Unit (OU) An organisational unit is an office or management unit within an office. It is used with reference to Roles and Access.
  ## P {#IDA4KJRF}  
  Pay As You Earn (PAYE) A system of tax collection used by employers to collect tax and national insurance from employees.
  Payment and Deduction Statement (PDS) A statement given by the contractor to those subcontractors from whom a deduction is required to be made. It is given at least monthly on the contractor’s headed notepaper and shows the amount of payments made to the subcontractor that month, and the amount of deductions made from those payments.
  Personal Hearing (PH) This is a hearing that takes place before a body that is independent of HMRC which decides where there is disagreement whether an appeal made by a customer should be upheld or not.
  Post Acceptance Evidence checks The aim of this check is to confirm that entries on the application form affecting the turnover test are accurate.
  Pre-population This term relates to contractor monthly returns (CIS300). Where a subcontractor was included on the previous monthly contractor return or where the subcontractor has been verified by the contractor within the last three months, their name and UTR will be printed on to the next monthly return issued for completion by the contractor.
  Private Finance Initiative (PFI) This is a form of Public Private partnership aimed at enabling the public and private sectors to work more closely together in the provision of public sector infrastructure and services.
  A B C D E F G H I J M N O P R S T U V   
  This is a Self-Assessment term for the office ‘owning’, or responsible, for a taxpayer’s affairs.  
  ## R {#IDAPOJRF}  
  Rapid Data Capture (RDC) A method by which the information from the contractors monthly returns (CIS300) are scanned on to HMRC computer systems
  Real Time Information (RTI) A new system for employers to report payments being made to employees phased in over the 2012-13 and 2013-14 tax years
  Registration This is the process of any contractor or subcontractor registering with HMRC that they are either acting as a contractor or subcontractor or possibly both within the construction Industry.
  Registration Card (CIS4) See entry under CIS4.
  Relevant persons Relevant persons, in the context of a company’s turnover test, includes each company director and, if the company is close (that is, broadly controlled by five or fewer people), each shareholder.
  Repayment Manual (RM) HMRC Internal guidance manual governing the area of repayments.
  Reverse premium Is a term commonly used to describe when a landlord or developer offers inducements to prospective tenants to take up an interest in land.
  Return Letter Service (RLS) This is where HMRC do not hold a current address for a contractor or subcontractor, and where the address has had the RLS flag set against it because output from HMRC has been returned undelivered.
  Review conclusion Letter sent by the Review Officer to the appellant following the internal review, setting out the conclusion of that review.
  Review officer Is the name given to the HMRC officer who from 1s t April 2009 is to carry out the internal review of the decision being appealed, this person is outside the management chain of the decision maker.
  ## S {#IDAUTJRF}  
  SA400 Form completed by a partnership when registering as a tax payer for Self-Assessment
  SA401 Form completed by an individual partner when registering as a tax payer for Self-Assessment
  SA402 Form completed by a company or trust partner when registering as a tax payer for Self-Assessment
  SAFE (Strategic Accounting Framework) This is the IT support for the collection and accounting of the miscellaneous charges previously dealt with by the Network Units in Cumbernauld and Shipley
  Self-Assessment (SA) System of taxation of income for individuals, partnerships and trusts.
  Self Assessment Manual (SAM) Manual covering all aspects of Self-Assessment available for viewing on the HMRC Internet site.
  Self-employment Self-employment is where there is a contract for services as opposed to a contract of service.
  Set-Off This is money not paid to a subcontractor, by a contractor who believes there has been a breach of contract.
  A B C D E F G H I J M N O P R S T U V   
  See entry under Payment and Deduction Statement.  
  Subcontractor A person who is contracted by a contractor to
  • carry out construction operations, or

  • provide labour for the carrying out of construction operations, or

  • be responsible to the contractor for the carrying out of those operations.    
      Subcontractors Tax Certificate (CIS5, CIS6) See the entries under CIS5 and CIS6.
      ## T {#IDAMZJRF}  
      Tax Treatment Qualifying Tests (TTQT) Compliance test run annually on all subcontractors to determine whether they retain gross payment status or revert to net payment status because of compliance failures.
      Tribunal A body independent of HMRC and administered by the Ministry of Justice. This will hear appeals from the 1st April 2009 against decisions made by HMRC, where an appeal has already been considered by the HMRC decision maker and also possibly the review officer.
      Tribunal caseworker The HMRC officer presenting the HMRC case of the decision at the Tribunal Hearing.
      ## U {#IDAF1JRF}  
      Unmatched Verification This occurs where it has not been possible to verify a subcontractor, usually because they have failed to register as a subcontractor with HMRC. An unmatched verification will result in deductions at the higher rate being made from the contractor’s payments to the subcontractor until such time as the subcontractor has registered with HMRC.
      Unique Taxpayer Reference (UTR) A reference allocated to any individual registering to pay income tax under Self-Assessment.
      ## V {#IDAQ2JRF}  
      Verification The process by which a subcontractor’s tax treatment by a contractor is determined. The alternatives are gross payment status, net payment status at the standard rate, or, where the verification is unmatched, net payment at the higher rate of deduction.
      Verification Reference (VR) number This is the number allocated to either a solitary subcontractor in the case of an unmatched verification, or to a group of subcontractors being verified during one contact (where there are no unmatched subcontractors identified during that verification session).
      Work Area Mailbox (WAM) This is a system of electronic communication between different offices within HMRC, where having sent an e form it arrives in the work area mailbox of the particular business area of the office it has been directed to.