CISR17070 - The Scheme: secondary legislation: regulation 6

This regulation deals with the verification process: to be read in conjunction withFA04/S69.

When a contractor intends to make a payment they must contact HMRC to verify whether asubcontractor, or their nominee, is registered for the scheme and how they should be paid:SI2005/2045 reg 6(1).

When verifying, SI2005/2045 reg 6(2) requires that a contractor must provide

  1. their name, UTR, AO and Employers Reference, and

  2. in respect of the subcontractor and any nominee

  3. the name, UTR and NINO (if an individual)
  4. the name of the partner and the firm, UTR of the firm, UTR or NINO of the partner if an individual, UTR or CRN if partner is a company (for partnerships)
  5. the name of the company, UTR and CRN (for companies)

A contractor must not verify a subcontractor unless a contract has been awarded to thesubcontractor or a tender for work has been accepted: SI2005/2045 reg 6(3).

A contractor does not need to verify in the following circumstances

  • the subcontractor receiving the payment has been included on a return made by the contractor in the current or two previous tax years: SI2005/2045 reg 6(4)(a).
  • the payment is made within two years of the appointed day and the subcontractor receiving the payment has been included on either a monthly return, or form CIS36, made by the contractor in the current or two previous tax years: SI2005/2045 reg 6(4)(b).
  • if the contractor is a company, the subcontractor receiving the payment has been included on either a monthly return, or form CIS36, made by a company within the same group in the current or two previous tax years: SI2005/2045 reg 6(4)(c).
  • where a contractor has made a multiple contractor election under SI2005/2045 reg 3 and has included the subcontractor receiving the payment on a monthly return within the current or two previous tax years in their capacity as a different contractor: SI2005/2045 reg 6(4)(d).
  • the subcontractor receiving the payment has been included in either a monthly return or form CIS36 in the current or two previous tax years under a contract held by a business which has been acquired by the contractor, and where the transfer of the business has been notified to HMRC: SI2005/2045 reg 6(4)(e).

For the purposes of Reg 4(c), ICTA88/S413 (3)(a) defines whether two companies arewithin the same group: SI2005/2045 reg 6(5).

Provided the contractor has verified the subcontractor or reported a payment to HMRC oneither a monthly return or form CIS36 in the current or two previous tax years, HMRC mustnotify them if the subcontractor loses the right to gross payment and is transferred tonet payment status (SI2005/2045 reg 6(6)(a)); is moved from net to gross payment status(SI2005/2045 reg 6(6)(b)); or is de-registered from the scheme completely. (SI2005/2045reg 6(6)(a) and (b))

The contractor is entitled to assume that any person verified or notified as beingregistered for gross or net payment has not ceased to be so registered: SI2005/2045 reg6(7).

ENABLING PROVISION – FA04/S69