CISR42750 - Register and maintain subcontractor: Registration for CIS - problem cases

| CISR42000 | Information guide contents | |—————————————————————————————————–|—————————-|

You will occasionally come across cases where it is not possible to register the subcontractor for CIS even though the parent system (such as Self-Assessment) shows that an ‘open’ record is already in existence.

It is important to take prompt action in these cases as without CIS registration the subcontractor will be liable for deduction at 30% by the contractor, whereas deduction at 20% or even gross payment status may be applicable.

These cases can fall into the following categories and the CIS Centre at Newcastle should take the following action in respect of each;

Bankruptcy cases

  • write to the subcontractor to find out the full name and address of each of the contractor(s) who are currently paying the subcontractor, and when those payments commenced, do not place your letter on BF.

When the subcontractor replies;

  • issue manual letter(s) to each of the contractor(s) concerned, advising them that you have a system problem at present and that they will not able to correctly verify the subcontractor at present
  • tell the contractor that your letter gives them the authority to make deductions at either 20%, or gross payment status (as appropriate) until DD/MM/YY for the subcontractor (allow a period of 6 months), until such time as the problem is resolved
  • tell the contractor that once the problem is resolved they will be asked to re-verify the subcontractor

  • send a WAM to the SA Processing Office, and advise them that urgent corrective action needs to be taken in accordance with SAM106030, so that the correct SA record is shown as being ‘live’ on TBS, so that you may then register the subcontractor for CIS

  • monitor the case by way of a spreadsheet to make sure that the record(s) have been corrected.

Once the record(s) is corrected,

  • write to the contractor(s) concerned and tell them that they may now re-verify the subcontractor for CIS
  • close the entry on the spreadsheet

Finally, you will need to use the function ‘Correct Error on Return’ on the contractor’s returns for the period they paid the subcontractor prior to the successful CIS registration, in order to send the payment and deduction details from each monthly return across to the newly registered CIS record for the subcontractor.

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Other CIS Registration problems

If you come across any other CIS Registration problems where it is not possible to register the subcontractor for CIS, even though the parent record is already in existence, you should take the action as described below;

  • write to the subcontractor to find out the full name and address of each of the contractor(s) who are currently paying the subcontractor, and when those payments commenced, do not place your letter on BF.

When the subcontractor replies;

  • issue manual letter(s) to each of the contractor(s) concerned, advising them that you have a system problem at present and that they will not able to correctly verify the subcontractor at present
  • tell the contractor that your letter gives them the authority to make deductions at either 20%, or gross payment status (as appropriate) until DD/MM/YY for the subcontractor until such time as the problem is resolved
  • tell the contractor that once the problem is resolved they will be asked to re-verify the subcontractor
  • If TBS does not show that the SA record is live please follow the guidance available in ‘frequently asked questions’ on the SA User Home Page on the intranet.

Once the record(s) is corrected,

  • write to the subcontractor and tell them that they should now Register for CIS by contacting the CIS Contact Centre, and that once they have done so, they should ask their contractor(s) to verify them for CIS.
  • advise the subcontractor that taking this action will ensure that their payments and deductions will then be correctly recorded against their own CIS record
  • close the entry on the spreadsheet

Finally, once the subcontractor has successfully registered for CIS, you will need to use the function ‘Correct Error on Return’ on the contractor’s returns for the period they paid the subcontractor prior to their CIS registration, in order to send the payment and deduction details from each monthly return across to the newly registered CIS record for the subcontractor.

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Dormant cases

Where the subcontractor telephones one of the CIS Contact Centres to register for CIS, but the SA Record is ‘Dormant’ perhaps because the subcontractor has recently recommenced self-employment after a period working on PAYE, or following a period of unemployment. The following actions should be taken;

  • the subcontractor will be referred to the Helpline for the Newly Self Employed (HNSE). HNSE will carry out the actions described at CISR42010 but will do so only for subcontractors applying for net payment status.
  • where the subcontractor wishes to apply for gross payment status they will be sent form CWF1 and CIS302 (SA400/SA401/SA402/CIS304 for a partner) to register for SA / CIS.

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Written requests to register for CIS

Where an individual or partner subcontractor makes a written request by letter to register for CIS and this is received at the CIS Centre Newcastle. The CIS Centre Newcastle will issue the applicant with the necessary forms CWF1 and CIS301 / CIS302 (depending upon whether they wish to apply for Net or Gross payment status) to register for SA and CIS, the applicant will be told to send these to the CIS Registration team Longbenton so that they can then be set up for SA / CIS and for Class 2 NIC’s.

Note; under no circumstances should the customer have deductions made at 30% by their contractor(s) for any length of time where deductions at either 20% or gross payment status are applicable for the subcontractor.