| CISR51600 | Action guide contents |
Monthly returns will be issued to each registered CIS contractor
with a contractor scheme record.
To set up a contractor scheme on CIS the following are
necessary
The setting up of the CIS subcontractor record is covered at
CISR90000 onwards.
A new contractor will open a contractor scheme by contacting
the New Employers helpline (NESI) with relevant details of the new
business. (See PAYE on line manual). NESI will allocate a new PAYE
reference, and a new BROCS reference under which any
PAYE/Subcontractor payments due are made. NESI will then fax the
details to the Area office that deals with that business address.
The Employers Section should then complete a form P510 and send it
to the SA or COTAX Processing Office to inform them of the BROCS
reference for the taxpayer.
Once the contractor scheme has been set up the contractor
must contact HMRC to verify the existence of a CIS record, and
payment status details for, the subcontractors to whom they have
awarded contracts for work and to whom payments will become
due.
Where a registered CIS contractor changes the type of their
concern, for example where a sole trader or partnership decides to
incorporate, you will need to set up a new CIS (and COTAX) record
with a new UTR. In the case of a new Limited Company a new PAYE
scheme and BROCS reference will also need to be allocated. In the
case of a sole trader or partnership that decides to incorporate
all of their existing subcontractors will need to be re-verified
under the new contractor scheme.
In some cases the change will not affect the contractor
scheme record, for example where a sole trader admits a partner, or
a Partnership of a husband and wife is continued by one of them as
a sole trader. These changes will be treated as a continuing
business and a new PAYE scheme and BROCS reference will therefore
not be required, the old BROCS reference may be transferred to the
new CIS record and allocated to the Partnership or sole trader.
Because the subcontractor verifications are associated with the
BROCS reference for the contractor scheme, it will still be
possible to issue pre-populated contractor returns to the new
contractor record in these circumstances and re-verification of
existing subcontractors will not be necessary.
In other cases there may be a more fundamental change, where
for example a continuing construction business is taken over by a
completely new owner(s), in this case a new PAYE scheme and BROCS
references will need to be allocated. Another example would be if
two partners in a partnership each decided to become sole traders
with each taking half of the subcontractor workforce with them,
then new PAYE and BROCS references would be required for both of
them. In these cases pre-population of the contractor monthly
returns received will not be possible and each contractor would
need to re-verify their own subcontractors.
It should not be necessary for the contractor to re-verify
their subcontractors because of a change in the contractor's UTR
but return exceptions are likely if HMRC is not kept informed of
the changes.
Where a contractor merges one or more contractor schemes with
another you will need to contact the Employers Section to arrange
for contractor records for the affected cases to include the date
of the merger. When this is done and because the subcontractor
verifications are associated with the BROCS reference for the
scheme it will still be possible to issue pre- populated returns to
the new contractor record under the ‘merged’ scheme
reference.
It should not be necessary for the contractor to re-verify
their subcontractors because of a merger of two BROCS scheme
references, as these should automatically transfer across to the
'merged to' contractor scheme, but return exceptions are likely if
HMRC is not kept informed of the changes.
This process may take up to seven days before CIS is
displaying the correct information with the verifications from the
old contractor scheme being transferred over to the ‘merged
to’ contractor scheme.
Where a concern is taken over by another together with
outstanding contracts and workforce (subcontractors), and the
contractor scheme continues to be operated as before the take-
over, it will not be necessary for the new concern to re-verify
those subcontractors.
It will be necessary to contact the Employers Section and
arrange for the BROCS scheme reference to be transferred to the new
CIS record. It should not be necessary for the new concern to
re-verify its subcontractors because of the take-over but return
exceptions are likely if HMRC is not kept informed of the changes.
If however, following the take-over, a new Contractor scheme
has been opened. Then the new owners will need to re-verify all of
their subcontractors under the new contractor scheme reference as
these will not be transferred across.
