CISR43160 - Register and maintain subcontractor: gross payment or payment under deduction: sole trader becoming a partnership

This is where a sole trader takes on a new person as a partner, without also taking on another business belonging to the new partner. The type of concern at the time of application is partnership. The new business should complete a form CIS304 (partnership application). The registering partner should sign the application.

Where the CIS Team at NICO receives an application involving a change in the type of concern where a previously registered sole trader has now formed a partnership, these will be referred (with a covering memo) to the Processing Office of the business, to take action on Self Assessment (SA) to ensure that the SA record is updated, see the Self Assessment Manual (SAM) at SAM101000. Once the SA record has been updated the Processing office should then continue to process the Registration application from the partnership for either net or gross payment status, and these should not be referred back to the CIS Registration Team at NICO.

The type of concern at the time of application is partnership. If the business is using the ‘Standard’ turnover test it will have to be able to show that it has earned ‘Net Construction Turnover’ of £30,000 multiplied by the number of partners, in the 12 months preceding the date of application. See CISR44160 for more information on the Standard Turnover Test. Alternatively if the business has earned ‘Net Construction Turnover’ of £200,000 or more in the 12 months preceding the date of application, the business will be able to meet the requirements of the ‘Alternative Turnover Test’. See CISR44170 for more information on the ‘Alternative Turnover Test’.

If the application fails the turnover test because it cannot meet these requirements, any appeal should, in the first instance, be referred to the CIS Advisory Team ( CISR97030).

Business test

Most applications will be able to pass the Business Test. The partnership is able to use evidence that the sole trader undertook work within the United Kingdom Construction Industry to satisfy this part of the business test.

Compliance test

As the type of concern is that of partnership, all partners will have to meet the requirements of the compliance test before gross payment status is granted.