CISR16250 - The Scheme: primary legislation: schedule 11: part 3

 PART 3: Conditions to be satisfied by companies


Para 9:

Where a company wishes to be registered for gross payment, whether as a partner in a firm or otherwise, the following conditions must be met.

Para 10:

The company must provide evidence, in accordance with regulations, to show that the firm's business is carried on in the United Kingdom; that it carries out construction operations itself or arranges for others to carry out construction operations, and that the business is largely conducted through a bank account. See SI2005/2045 reg 27.

Para 11:

  1. The company must
    1. provide evidence, as prescribed in regulations, that their business, in the year following the application, will receive relevant payments at least equal to the minimum turnover requirement, or that those holding shares in the company are themselves companies with gross payment status. See SI2005/2045 reg 2
    2. "'Relevant payment' has the meaning described in para 3(2)"
  1. Minimum turnover, as specified in (1)(a) above, is whichever is the smaller of
    1. the minimum amount multiplied by the number of relevant persons in the company, see SI2005/2045 reg 30, or
    2. an amount specified in regulations. See SI2005/2045 reg 28(3).
  1. A 'relevant person' , as specified in (2)(a) above, is
    1. for a close company, a director (see S67 IT (Earnings and Pensions) Act 2003) or a beneficial holder of shares in the company, and
    2. in all other cases, a director of the company.
  1. The Board can make regulations to
    1. determine the number of relevant persons to be taken into account in accordance with (2) above, that is where, over a period, the number of such persons has fluctuated, See SI2005/2045 reg 30 and
    2. in prescribed circumstances, allow companies that do not meet the conditions at (1) to be treated as having met the turnover test. See SI2005/2045 reg 31.

Para 12:

  1. The company must have, subject to (2) and (3), during the qualifying period the applicant must have met all requests for information and complied with the following tax obligations to:

    • pay amounts required to be deducted under section 61
    • submit CIS returns
    • pay amounts required to be deducted under PAYE regulations
    • submit a Self Assessment return
    • account for and pay VAT as required by or under the VAT Act 1994

  2. The Board may make regulations allowing a company to be treated as having satisfied the qualifying conditions. See SI2005/2045 reg 32.

  3. A company can be regarded as satisfying the conditions in (1) if there is a reasonable excuse for non-compliance and the company complied once the reasonable excuse had ended.

  4. The company must have paid any National Insurance Contributions when due.

  5. During the qualifying period the company must have complied with the following obligations under the Companies Act 2006:

    • sections 394, 395, 437 and 441 (accounts):
    • sections 167(1), 167(2), 276(1) and 276(2) of that Act (changes in director or secretary):
    • Part 24 of that Act (annual returns)
    • regulations under Part 34 of that Act (overseas companies) which are about:
    • registration of particulars
    • accounts, reports or returns
    • trading disclosures

  6. There must be reason to expect that the company will continue to comply with all its obligations.

  7. This paragraph stipulates that not only must the applicant have met all their tax obligations in full but have also done so on time.

Para 12A:

The company itself does not have to satisfy the criteria in the compliance test if:

  • One or more of its members is registered for gross payment (as a partnership or otherwise) and
  • That member or those members possess or are entitled to possess
    • At least 50% of the share capital or issued share capital of the company or
    • At least 50% of the voting power of the company or
    • So much of the issued share capital of the company as would, on the assumption that the whole of the income of the company were distributed among its members, entitle the member or members to receive at least 50% of the amount so distributed, or
    • Such rights as would entitle the member or members in the event of winding up of the company or in any other circumstances, to receive at least 50% of the assets of the company which would then be available for distribution among its members (disregarding any rights a member might have as a loan creditor).

If the company were to gain gross payment status in this way, the member who already holds gross payment status cannot have been granted it in this way or in the equivalent way for firms.