CISR44130 - Register and maintain subcontractor: turnover test: net turnover explained

CISR Reference Topic
CISR44600 Action guide contents

Net turnover is arrived at by using the following calculation:

Net Turnover Gross construction turnover
Less Related materials
Equals Net turnover

These terms are explained below.

Gross construction turnover

Not all business turnover is eligible to be taken into account in the turnover test.CIS focuses on the construction industry, so the qualifying conditions are aimed at thoseareas of a business’s activity within the construction industry.

Gross construction turnover includes any payments under contractsrelating to construction operations. It also includes payments received for supplyinglabour for these activities.

The legislation defines construction operations at FA2004\S74(2). Appendix B of thebooklet CIS340 describes the range of operations considered to be within and outside thescope of the Scheme in greater detail.

Gross construction turnover can include receipts from work done by an applicant for:

  • someone who is definably a contractor under the CIS Scheme
  • private householders and businesses which are not contractors under the Scheme

It does not include VAT or turnover arising from commercial activities not directlyinvolving the carrying out of construction work.

Related materials are the costs incurred on materials used in carrying out contractsthat generate gross construction turnover.

For the purposes of the turnover test related materials includes the total cost to theapplicant of the following items:

  • land, building materials and consumable items
  • fuel for plant
  • the actual cost incurred for plant hire
  • any Construction Industry Training Board levy.

The following items are not ‘materials’

  • subsistence expenses
  • fuel for travelling
  • costs of scaffolding purchased by scaffolding subcontractors.