CISR45020 - Register and maintain subcontractor: business test: how is the test carried out

| CISR45600 | Action guide contents | |—————————————————————————————————–|———————–|

The test is carried out in two stages, the first of which assesses whether theinformation provided in the application (whether on a form, or by telephone or Internet)justifies a preliminary decision that the applicant passes the business test. This isreferred to in this guidance as the preliminary business test.

The second stage is carried out after the application for gross payment has been admittedand represents a test that verifies the factual information provided in support of theapplication.

These tests are described in more detail below.

Preliminary business test

This involves checking the application to ensure that:

  • the details provided about the bank account are verified by the Bank Wizard
  • the applicant has declared that they are carrying on a business in the UK
  • the applicant has declared that the business consists of, or includes carrying out construction operations, or providing labour for such work
  • the applicant has supplied details of their activities in the qualifying period.

Provided that these preliminary checks are satisfactory, the applicant is provisionallytreated as having passed the business test. Note that this decision is made together withdecisions on whether the applicant has passed the turnover and compliance tests.

If a subcontractor is asked to attend an Enquiry Centre for an identity check, ContactCentre staff will be asked to check the application in all respects to make sure forexample, that the applicant meets the conditions to pass the business test.

Post-acceptance check

The Post-Acceptance Check of the business test should be carried out using

  • the application form completed by the applicant, or
  • information gathered by way of a telephone or internet application
  • evidence of business receipts supplied in connection with the turnover test, or recorded on HMRC systems
  • successful matching of Verification Numbers supplied by the applicant when registering
  • accounts and returns in the tax file if there is one — generally, this will only apply to company and partnership cases

Note that the Post-Acceptance Check of the business test will generally be carried outat the same time as the turnover test evidence is checked. Clearly, if the applicant hasalready demonstrated receipt of construction payments, there can be no doubt of theexistence of the business and that it includes carrying out construction operations orproviding labour for such.

You should note that the object of the check is not merely to establish that the businesstest requirements are satisfied at the date the check is carried out but to confirm thatthose requirements were met when the application was made.