How to be paid under CIS gross payment status

Who can receive gross payments under CIS?

If you run a business that meets certain conditions, you can apply to HMRC to register you a gross payment. Your business must:

  • Do construction work in the UK and be run largely through a bank account.
  • Have a construction turnover, excluding VAT and the cost of
    materials, of at least £30,000.
  • Have complied with all its tax obligations

Before HMRC can grant you gross payment status so you can get paid
with no deductions, you’ll need to show them that your business passes
three tests.

Business test

You’ll need to show HMRC that your business:

  • carries out construction work – or provides labour for construction work – in the UK
  • is run largely through a bank account

Turnover test

HMRC will look at your business turnover from construction work for
the 12 months before you apply for gross payment status. Ignoring VAT
and the cost of materials, your construction turnover must be at least:

  • £30,000 if you’re a sole-trader
  • For partnerships : £30,000 for each partner, or at least £200,000 for the whole partnership
  • For a limited company : £30,000 for each director or at least £200,000 for the whole company
  • If five people or fewer control your company, it must have an annual
    construction turnover of at least £30,000 for each of these individuals.

Compliance test

You and any directors or partners in the business, or beneficial
shareholders (where the company is controlled by five or fewer persons)
must have submitted all tax returns and paid all tax due on time in the
12 months before your application. If HMRC has asked for any information
about your tax affairs in that period, you’ll need to have given it to
them.

You’re allowed a few lapses or late payments in the 12 months and HMRC will ignore any, or all, of the following failures:

  • three late submissions of the CIS contractor monthly return, including ‘nil’ returns – up to 28 days late
  • three late payments of CIS/PAYE deductions – up to 14 days late
  • one late payment of Self Assessment tax – up to 28 days late
  • an employer’s end of year return made late
  • any late payment of Corporation Tax – up to 28 days late, including
    where any shortfall in the payment has incurred an interest charge but
    no penalty
  • Self Assessment return made late
  • payment not made by the due date, where it is less than £100
  • If HMRC agree that you can be paid gross, you must declare your payments in your tax return at the end of the tax
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