There are five types of registration cards and certificates used in the Construction Industry Scheme:
CIS 4(P) is the permanent registration card issued to most subcontractors. It entitles the holder to be paid with a deduction on account of tax and National Insurance contributions. It does not have an expiry date but it shows the photograph and signature of the authorised holder, along with their National Insurance number.
CIS 4(T) is the temporary registration card issued to subcontractors who do not hold or do not know their National Insurance number. It enables the holder to be paid with a deduction on account of tax and National Insurance contributions while they obtain a valid National Insurance number.
CIS 6 is the subcontractor certificate issued to individuals, partners in firms and directors of most companies that meet the required turnover, business and compliance requirements. The certificate shows the photograph and signature of the holder and entitles them to be paid gross.
CIS 5 is the subcontractor certificate issued to companies that can’t be issued with a CIS 6. There is no photograph on the certificate but it bears the company secretary’s signature. It entitles the subcontracting company to be paid gross.
CIS 5 (Partner) is the subcontractor certificate issued to one partner in business partnerships that can’t be issued with a CIS 6. There is no photograph on the certificate but it bears the signature of the partner nominated to hold the certificate by the firm. It entitles the partnership to be paid gross.
Sometimes a subcontractor’s payment status will change from payment under deduction to gross payment. If this happens, the Tax Office will tell the subcontractor and any contractors who have verified or used the subcontractor in the current or previous two tax years. The revised payment status should then be applied to all subsequent payments to the subcontractor as soon as it is practical for the contractor to do so.
Subcontractors who meet certain qualifying conditions get the tax certificates and those who do not get the registration cards.
Only a minority of subcontractors will qualify for a Tax Certificate which then entitles them to gross payments. To qualify you must pass three tests; the turnover test, the business test and the compliance test.
- The turnover test
To meet the turnover test as an individual you must show that for a continuous three year period you have had a net turnover of £30,000 a year or more.
- The business test
You need to be in a business that provides labour to carry out construction work, conduct your business primarily through a bank account and also keep proper business records.
- The compliance test
Tax affairs must be kept up-to date during the three years before application. You need to show you have paid all tax, including any PAYE and subcontractor deductions and submitted all tax returns on time.
If you qualify, you should receive your certificate within 30 days of application; if not you will automatically be sent a registration card. If you do get a subcontractor’s tax certificate it will be one of three types; either a CIS6, which is the most common type, a CIS5 which is issued to some companies because of their size, or a CIS5 (Partner) which is again issued to firms which have complex operations or geographical spread. Only the CIS6 shows the authorised user’s photograph and signature.
If you need further information about types of registration cards and CIS tax certificates, Taxfile’s tax accountants in South London, Battersea, Devon, Yorkshire or Carlisle can help you with your registration.