Certificates: compliance test: introduction

CERTIFICATES: INTRODUCTION

This paragraph serves as an introductory overview of the compliance test; for deeper coverage use the above links to information or action guides.

This module covers the application of the compliance test to subcontractor's applying for certificates and some background detail on the separate aspects of the test.

The Subcontractors Tax Certificate allows the subcontractor to receive payment without deductions being made on account of tax and NIC. It involves the Revenue being able to rely on the subcontractor to comply with tax obligations resulting from such payments and the compliance test is there to establish that reliability.

Action guides are provided on gathering the information required to conduct the test under the action guides menu.

The legal basis of the compliance test is at ICTA88\s562 (8)-(14). The main requirements of the test are that for all accounting periods ending within the three years to the date of the application (the 'qualifying period'),

• the subcontractor has complied on time ('timely compliance') with all relevant obligations under ICTA88 and TMA70.

• where the subcontractor was overseas at any time during the three years to the date of application, s/he met all similar tax obligations in that country.

and that

• for periods after the date of application the Revenue should have reason to expect that the subcontractor will continue to comply with those obligations on time.

The test makes allowance for what are called minor and technical failures of compliance.

In order to avoid any claims of discrimination by the Revenue, in every case where an applicant for a certificate fails to pass the compliance test and that failure cannot be regarded as 'minor and technical' as detailed at Parts A & B in Appendix 2 of the booklet IR40(CIS) and at CIS3415, you must refuse to issue a certificate.

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