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 for convenience are set out for you again below. The only circumstances where failures outside of those listed in Regulation 32 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.

Public guidance about the failures that we will disregard is given in the Factsheet CIS343 'Applying to be paid gross – advice for subcontractors'.

Failures you can overlook

• Three late submissions of the contractor’s monthly return CIS300 - up to 28 days late
• Three late payments of CIS/PAYE deductions – up to 14 days late
• One late payment of Self Assessment tax – up to 28 days late
• Any employer's end of year return P35 submitted late
• Any late payments of Corporation Tax – up to 28 days late, including where any shortfall in the payment has incurred an interest charge but no penalty
• Any amount of £99.99 or less not paid by the due date (this was added by the amending regulations in SI 2008/1282).
• Any Self Assessment return made late
• Any failures classed as 'minor and technical' in respect of obligations preceding 6 April 2007 where these are still within the twelve month qualifying period

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
• Any submission of the contractor’s monthly 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/PAYE deductions up to 14 days late
• Any payment of CIS/PAYE deductions made later than 14 days after the due date
• Any payment of CIS/PAYE deductions already due but remaining unpaid at the date of application
• Two or more payments of SA tax paid less than 28 days after the due date
• Any payment of an interest charge, penalty or surcharge made after the due date.
• Any payment of Corporation tax made more than 28 days after the due date..
• Any payment of SA tax already due but remaining unpaid at the date of application
• Any payment of Corporation tax already due but remaining unpaid at the date of application.
• Any SA return due in the qualifying period but outstanding at the date of application
• Any failure not classed as 'minor and technical' preceding 6 April 2007 but within the 12 months prior to the application.

Bear in mind that the failures mentioned above relate to obligations falling due 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 review. 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 review 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.