PART 1: DATES, DEFINITIONS AND OBLIGATIONS
subcontractor verified at the same time) indicating that the subcontractor has been verified as matching their records and which is for the contractor’s use only.
Where a subcontractor cannot be matched, a unique ‘unmatched’ number will be supplied. Verification numbers must be noted, as they have to be included on the CIS300 monthly return. Further guidance can be found at the webpage above. N.B. When quoting verification numbers all prefix or suffix letters should be included. Payment of subcontractors must be made in the manner notified by HMRC: • gross - to subcontractors registered who have been granted gross payment status by HMRC • under standard rate (20%) deduction to any other registered subcontractor • under deduction at the higher rate (30%) to ‘unmatched’ subcontractors. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS To qualify for gross payment, a subcontractor business must fulfil each of the following tests: • Business test - it must be run in the UK through a bank account • Turnover test - it must have a construction turnover, excluding cost of materials and VAT, of at least £30,000 each year (or more for partnerships and most companies) • Compliance test - it must have complied with key statutory obligations. The ‘Turnover test comprises two tests based on ‘net’ turnover in the 12 months before application. Where the net turnover is insufficient in the 12-month period it may still be possible to pass, for details contact HMRC: • Standard test - a construction turnover of at least £30,000 in the test period • Alternative - a subcontractor must have a net turnover of at least £100,000 (£200,000 prior to 6 April 2016) in the test period. Sole trader subcontractors must pass the Standard test. Partnerships must pass the Standard test in respect of each partner, or the Alternative test. Companies - those wholly owned by companies already having gross status do not have to pass the turnover test. All other companies must pass either test. The Standard test being in respect of each director, and if a close company, for each beneficial shareholder. Payment statement A contractor must provide a statement of payment to each subcontractor from whom a deduction has been made (whether at the standard or higher rate). Statements must be issued within 14 days of the end of a tax month and may be issued to cover all payments in a tax month or with each payment. In the case of ‘unmatched’ subcontractors, the ‘unmatched’ reference must be entered on each statement in order that tax refunds, where due, can be made at a later date. Subcontractors paid gross do not need to be provided with statements. (The payment statement replaced the CIS25 voucher.) No printing, copying or reproduction permitted. CIS300 Returns A contractor must make a monthly online CIS300 return, within 14 days of each tax month end i.e. by 19th of the following month, of all payments paid to subcontractors whether gross or under
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