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The 3 tests
1. Business test
Your business does construction work in the UK, or supplies labour for it, and it is run through a bank account.
2. Turnover test
HMRC looks at your construction turnover for the last 12 months, without VAT and the cost of materials. It must be at least:
| If you are | You need at least |
|---|---|
| A sole trader | £30,000 |
| A partnership | £30,000 for each partner, or £100,000 for the partnership |
| A limited company | £30,000 for each director, or £100,000 for the company |
If a company is controlled by 5 people or fewer, its shareholders count too: £30,000 for each person.
3. Compliance test
You have sent your tax returns and paid your tax and National Insurance on time over the last 12 months. HMRC's guidance lets a few small slips go:
- a Self Assessment or Corporation Tax return up to 28 days late
- up to 3 late VAT returns or CIS monthly returns, each up to 28 days late
- up to 3 late payments of £100 or more of each tax, each up to 14 days late
- any late payment under £100
Any late National Insurance, or anything still unsent or unpaid when you apply, fails the test.
Sources: GOV.UK and HMRC's CIS manual. Checked .
How to apply
You apply online with HMRC. It is free. Pick the form for your business:
Have your UTR, bank details and proof of turnover ready, such as bank statements, CIS payment and deduction statements and invoices.
Questions
What is CIS gross payment status?
It means contractors pay you in full, with no CIS tax taken off. You then pay your tax and National Insurance at the end of the tax year, through your tax return.
How much turnover do I need?
At least £30,000 in the last 12 months as a sole trader. For a partnership it is £30,000 for each partner, or £100,000 for the whole partnership. For a company it is £30,000 for each director, or £100,000 for the whole company. Leave out VAT and the cost of materials.
My company has 5 or fewer owners. Does that change things?
Yes. If a company is controlled by 5 people or fewer, HMRC counts its shareholders as well as its directors, each person once. The turnover needed is £30,000 for each of them, or £100,000 for the company.
I filed my tax return a few days late. Have I failed?
Not on its own. HMRC's guidance says it can overlook a Self Assessment or Corporation Tax return sent no more than 28 days late. More than 28 days late, or still not sent, means you fail the compliance test.
Does late VAT or PAYE count against me?
It can. HMRC can overlook up to 3 late VAT returns or CIS monthly returns (each up to 28 days late), and up to 3 late payments of £100 or more (each up to 14 days late). Anything worse fails. Payments under £100 are overlooked.
How do I apply?
Online with HMRC, using your Government Gateway login. There are separate forms for sole traders, partnerships and limited companies. It is free.
Is this checker from HMRC?
No. It is a free tool from Sovereign Plus, built from GOV.UK guidance and HMRC's own manual. HMRC makes the decision when you apply.
Sources
- What you must do as a CIS subcontractor: how to get gross payment status (GOV.UK): the three tests and the £30,000 / £100,000 turnover figures.
- CISR44100: the threshold explained (HMRC manual): most partners or relevant persons at any one time in the 12 months.
- CISR44130: net turnover explained (HMRC manual): what counts as materials.
- CISR44120: the multiple for partnerships and companies (HMRC manual): directors and shareholders of close companies, each counted once.
- CISR45020: how the business test is carried out (HMRC manual).
- CISR46080: compliance tolerance (HMRC manual): the slips HMRC can overlook.
- How to apply (GOV.UK): sole trader, partnership, limited company.
Checked against GOV.UK on .