Can CIS Contractors be Paid Without Tax Deducted

Can CIS Contractors be Paid Without Tax being Taken Off?

Gross payments are when the contractor pays the subcontractor gross (without any deductions for tax). To qualify for being paid gross the subcontractor has to pass the HMRC test. For HMRC to agree to register the subcontractor as qualifying for gross payments the subcontractor must:

• Perform construction work in the UK through a UK bank account
• Have a construction turnover, excluding VAT and materials, of over £30k each year
• Have complied with all tax obligations

The subcontractor has to pass three tests based on the information above. Theses tests are:

Business Test

The subcontractor has to show that their business:

• Carries out construction work, or provides labour for construction work in the UK
• Is run largely through a UK bank account

Turnover Test

The subcontractor needs to prove to HMRC that their business turnover from construction work, excluding VAT and materials, for the 12-month period prior to application is at least:

• £30,000 if a sole trader
• £30,000 for each partner in a partnership or at least £200,000 for the whole partnership
• £30,000 for each director of a company, or at least £200,000 for the whole company

Compliance Test

The subcontractor must have submitted all tax returns & paid all tax due on time in the last 12 months before application. If HMRC agrees that the subcontractor qualifies to be paid gross then the payments must be declared in the tax return at the end of each financial year.

Should you be paid gross then you may be subject to a Tax Treatment Qualification Test (TTQT) also known as a Scheduled Review. This is where HMRC check that