CISR46030 | Register and maintain subcontractor: compliance test: partnerships

To satisfy the compliance test the partnership and all the partners must have done all the following during the 12 months prior to the date of application (the qualifying period)

• sent in any SA return due within that period

• if they (the partners or the partnership) are contractors, sent in CIS returns and paid CIS deductions on time

• if they (the partners or the partnership) are VAT registered, sent in VAT returns and paid liabilities on time

• if they (the partners or the partnership) are employers, to have paid PAYE and NICs liabilities on time

• paid their own NICs (if applicable)

• complied with all requests for accounts or other relevant information

• any obligation paid late or still outstanding that is £99.99 or less in respect of PAYE, VAT liabilities or CIS deductions during the ‘qualifying period’ will be treated as meeting the compliance test.

For further detailed information regarding the failures that may or may not be accepted for the purposes of the compliance test see;

Finally, there must be ‘reason to expect’ that the applicant will continue to comply with tax obligations. (See CISR46100 for more details on the ‘Reason to expect’ test).

Exception from compliance test

The compliance test is treated as satisfied by the firm if, at the time of the application one or more of the partners already holds gross payment status and that partner or those partners together have a right to a share of at least half of the assets, or at least half of the income of the firm. However, if the firm were to gain gross payment status in this way, the partner who already holds gross payment status cannot have been also granted it in this way or in the equivalent way for companies.

Reasonable excuse

You may ignore certain failures to comply with the above conditions where

• The partnership or partner had a ‘reasonable excuse’ for the failure to comply
  and

• Once the excuse ceased to apply, the partnership or partner then complied with the obligation without unreasonable delay

See CISR81020 for more information about what can be regarded as reasonable excuse.

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Timely compliance

The legal requirement is not merely that the applicant must have fulfilled tax obligations arising in the 12 month qualifying period preceding the date of application. Those obligations must, in addition, have been fulfilled within the time allowed in law else this requirement is not satisfied and the applicant fails the compliance test.

However, there are certain tolerances specified in the regulations whereby HMRC will overlook a compliance breach. See CISR46080 for more information about these tolerances.

See CISR18140 for information on partners with

• Voluntary arrangements

• Informal arrangements