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| Verification is a new process where you can check to see whether to pay a subcontractor gross or net. However, unlike the old system where the subcontractor would show you a card or certificate, its now up to you to 'verify' their details direct with HMRC. But you don’t have to do that all the time. In fact, most existing subcontractors do not need to be verified... |
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When do I verify my subcontractors?
Whenever you take on a new subcontractor - unlike the current system where you have to re-check your subcontractors' certificates or temporary cards depending on when they expire. Under the new scheme you'll just check once, then carry on paying them in the same way until HMRC tells you to do something different - or you haven’t paid them for two or more "tax years".
What do I do about existing subcontractors?
The HMRC will send you two lists of your existing subcontractors (one in autumn this year and one next spring). These are subcontractors you don't have to verify. Note: you'll need to keep track of these details for future reference, so make sure you have a good filing system in place (there wont be any reminders like the old cards and certificates).
What happens if I need to verify?
First you contact the HMRC, either:
* online at www.hmrc.gov.uk/new-cis, or
* by telephone on 0845 366 7899
Then you tell them your:
* name
* Unique Tax Reference (UTR)
* Accounts Office Reference.
Then you tell them about the subcontractors you want to verify. HMRC will need:
* their name
* their individual or company UTR...
...AND further details set out below depending on how they trade:
What you are trading as and the information you will need in each case:
Sole Trader - National Insurance Number (NINO)
Limited Company - Company Registration Number (CRN)
Partnership - Partners name and UTR, plus their NINO (if an individual) or CRN (if they're a limited company).
What are the possible results of verification?
There are three possible results:
* Gross: This means that HMRC will tell you to pay your subcontractor gross and without making any deductions.
* Net: This means HMRC will tell you to pay them net of the standard deduction.
* Unmatched: This means HMRC can't find them on their system, so they'll need to sort it out with HMRC. However, in the meantime you can pay them with deductions at a higher rate.
What details will they give me?
A verification number which will look something like this: V0000543267. If HMRC have not been able to match the subcontractor with their records, the number will have an extra letter at the end: V0000543267/R. Don't forget to jeep this number in a safe place for future reference.
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