CISR44230 | Register and maintain subcontractor: turnover test: averaging rule

| CISR44600 | Action guide contents | |—————————————————————————————————–|———————–|

Businesses that have gross payment status will be subject to a periodic scheduled review to ensure that they continue to meet the statutory standards for this status. The review will check whether

• the business’s tax compliance in the qualifying period (set relative to the scheduled review date) is satisfactory

• if an application were made at the time of the review, the business would pass the turnover test.

You should note, however, that the turnover test carried out for this purpose differs from the test applied to new applicants. In this context the business is considered to have passed the test if

• its net turnover in the 12 months preceding the scheduled review date exceeds the prescribed threshold for that type of business (in other words, it passes the Standard test), or

• its average annual net turnover in the 3 years ending with the scheduled review date exceeds the prescribed threshold for that type of business.

This averaging rule is provided for in SI2005/2045 reg 29(1)(c)(ii) and is not to be applied to new applicants for gross payment status.