CISR46080 - Register and maintain subcontractor: compliance test: compliance tolerance
The following is a guide to the failures that you may overlook when considering registration for gross payment. Please bear in mind that the only failures that you can disregard for the purposes of the Compliance Test are those set out in Regulation 32 SI2005/2045 and Regulation 2 SI2008/1282. For convenience, these are set out for you again below. The only circumstances where failures outside of those listed in these two regulations can be disregarded is where the applicant can demonstrate that they had a reasonable excuse in relation to a particular failure(s). Further information as to what can constitute a ‘reasonable excuse’ can be found at CISR81020.
Failures you can overlook
- Three late submissions of the contractor’s monthly return CIS300 - up to 28 days late
- Three late submissions of VAT returns - up to 28 days late
- Three late payments of CIS deductions/PAYE/VAT of £100 or more - up to 14 days late (failures allowed for each tax individually)
- Any late payment of CIS deductions/PAYE/VAT where the amount is under £100
- Any Income Tax or Corporation Tax Self Assessment return made not later than 28 days after the due date
Note: For those that hold Gross Payment Status at 6 April 2024, failures in VAT compliance occurring before 6 April 2024 should be disregarded for the purposes of the compliance test.
What we cannot overlook
We cannot overlook the following failures involving obligations falling due in the qualifying period
- Four or more late submissions of the contractor’s monthly return CIS300, where they were less than 28 days late
- Four or more late submissions of VAT returns, where they were less than 28 days late
- Any submission of the contractor’s monthly return, a VAT return or Income Tax Self-Assessment or Corporation Tax Self-Assessment return made later than 28 days after the due date
- A contractor’s monthly return already due but remaining outstanding at the date of application
- Four or more late payments of CIS deductions/PAYE/VAT of £100 or more up to 14 days late (failures allowed for each tax individually)
- Any payment of CIS deductions/PAYE/VAT of £100 or more made later than 14 days after the due date
- Any payment of VAT/CIS/PAYE deductions already due of £100 or more but remaining unpaid at the date of application
- Any late payment of National Insurance contributions
- Any Income Tax SA return due in the qualifying period but outstanding at the date of application
- Any Corporation Tax return (CT600) due in the qualifying period but outstanding at the date of application
- Any VAT return due in the qualifying period but outstanding at the date of application
Note: For those that hold Gross Payment Status at 6 April 2024, failures in VAT compliance before 6 April 2024 should be disregarded for the purposes of the compliance test.
Bear in mind that the failures mentioned above relate to obligations falling due according to CISR in the qualifying period. Outstanding obligations falling due prior to the start of the qualifying period cannot be taken into account directly.
You should also bear in mind that a return or payment may have become due just before the date of your compliance check. If the Tax Treatment Qualifying Test (TTQT) fails when taking into account the late submission of this latest return or payment, but would have passed otherwise you should apply a tolerance of:
- 28 days for the most recent late payment or SA / COTAX return and
- 38 days for the most recent and penultimate contractors monthly return (CIS300)
This will allow time for the payment or return to be processed and logged on to the system. For examples of this see CISR43070. These tolerances must not be applied to any other obligations of the subcontractor that fall due earlier in the qualifying period.
Refusing gross payment registration
You must refuse gross payment registration in every case where compliance failures outside the tolerance limits set out above are identified.