Just because someone holds gross payment status it does not
automatically follow that they are self-employed. It is the
contractor's responsibility to establish whether, in relation to a
particular job or contract, the person is employed or
self-employed. If the subcontractor is employed, the PAYE system
must be operated. The contractor should consult the CIS Helpline or
the HMRC website if there is any doubt.
Before a contractor makes a payment to a subcontractor
without deduction, the contractor must decide whether the
verification process needs to be undertaken in order to determine
what payment status may be used in paying the subcontractor. The
Verification process is explained in detail at
CISR50000 onwards.
Failure to make the necessary checks may result in the
contractor becoming liable for the deductions that should have been
made and/or the withdrawal of the contractor's own gross payment
status (where the contractor has gross payment status as a
subcontractor).
If the contractor determines that verification is necessary,
this process should be undertaken to confirm the payment method
that must be used in paying the subcontractor.
Where verification was not necessary, payment may be made
without deduction but only where this was how the subcontractor was
paid last time
and there has been no notification from HMRC since then
stating that payments to this particular subcontractor must now be
made under deduction.
