What is CIS Gross Payment Status and how do I get it?

Full answer

CIS Gross Payment Status (GPS) is the highest CIS registration tier, allowing eligible subcontractors to be paid in full without any tax deduction. This provides a major cash flow advantage over the standard 20% deduction (or 30% for unregistered subcontractors). Three qualifying tests 1. Business test -- Must be carrying on business as a subcontractor in the construction industry -- Must have a business bank account used exclusively for the business -- The business must be managed from a fixed establishment in the UK 2. Turnover test -- Sole trader: net construction turnover (excluding materials and VAT) of at least GBP 30,000 in the previous 12 months -- Partnership: GBP 30,000 per partner, or GBP 100,000 total for the partnership -- Company: net construction turnover of at least GBP 30,000 per company director, or GBP 100,000 for the company -- with different tests for holding companies 3. Compliance test In the 12 months before the application, all of the following must be met: -- All PAYE, NI, CIS deductions, CT and VAT paid on time -- All Self Assessment/CT returns filed on time -- No outstanding tax debt of more than GBP 100 not covered by a Time to Pay arrangement How to apply -- Online via the CIS section of HMRC's business tax account -- By phone to the CIS helpline -- Via a tax agent Annual review and withdrawal HMRC reviews GPS status at least annually. Failure to maintain compliance (late return, missed payment) can trigger withdrawal of GPS with 30 days' notice. During the notice period, the contractor must start deducting 20% again. Subcontractors can appeal withdrawal. Why GPS matters Without GPS, a subcontractor turning over GBP 1M/year could have GBP 200,000 tied up in unreclaimed CIS deductions awaiting the annual Self Assessment refund -- a significant working capital cost.

More answers

• What is the Construction Industry Scheme (CIS) and how does the 20% deduction work?