Securing gross payment status under the Construction Industry Scheme (CIS) is a big win for construction businesses. It means your company can receive payments in full without any tax deducted at source – a major cash flow advantage.
But here’s the catch: as your business grows, so does your risk of losing that status.
In this guide, we’ll explain how gross payment status works, what can cause you to lose it, and the key actions you should take to keep it as your business expands.
✅ What Is CIS Gross Payment Status?
Gross payment status means HMRC allows you to receive 100% of your subcontractor payments, without the usual 20% CIS tax deduction.
This improves your cash flow and lets you manage your own tax obligations through corporation tax and self-assessment.
🔍 Eligibility Criteria (and Ongoing Requirements)
To qualify for gross payment status, your business must:
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Be registered for CIS
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Be based in the UK and carry out construction work
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Pass HMRC’s ‘Compliance Test’, including:
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Timely submission of CIS returns and payments
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No outstanding taxes (VAT, PAYE, Corporation Tax)
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Good record-keeping
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You’re not just assessed when you apply – HMRC reviews your compliance regularly.
🚨 What Can Cause You to Lose Gross Payment Status?
Even established businesses can lose their status if:
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You file late CIS returns
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You make late payments to HMRC (even by a few days)
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You have outstanding tax debts
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You change your business structure without notifying HMRC (e.g. from sole trader to limited company)
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You don’t maintain the required turnover thresholds (e.g. £30,000 per director or £100,000+ for companies)
⚠️ HMRC doesn’t give many second chances – loss of status means going back to 20% deductions until you’re eligible to reapply (often after 12 months).
🏗️ Why It Gets Harder to Maintain as You Grow
As your business scales, so does your complexity:
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More subcontractors = more CIS admin
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Higher turnover = higher VAT and PAYE obligations
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More sites = greater risk of missed payments or reporting errors
The more moving parts, the greater the chance something slips through the cracks—and HMRC notices.
🔒 How to Keep Your Gross Payment Status as You Grow
1. Submit CIS Returns On Time, Every Month
Never miss the 19th-of-the-month deadline. Use automated systems (like Xero or BrightPay) or outsource to a specialist.
2. Pay All Taxes Promptly
Set up Direct Debits for VAT, PAYE, and Corporation Tax. Even a short delay can flag your account with HMRC.
3. Keep Accurate Digital Records
Use cloud accounting software to track:
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Subcontractor payments
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Tax liabilities
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CIS verifications and statements
Keep documents organised and accessible in case HMRC conducts a review.
4. Monitor Your Turnover
To maintain gross status, you must meet the required annual turnover threshold. Keep an eye on it—especially if your workload drops or business model changes.
5. Stay on Top of Business Changes
Changing directors, business structure, or trading address? Inform HMRC immediately. Unreported changes can trigger a compliance review.
6. Schedule Internal CIS Reviews
Set a quarterly review to check:
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CIS filing compliance
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Tax payment history
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Subcontractor verification processes
This helps catch issues before HMRC does.
👷♂️ Real-World Example
A London-based construction company we worked with had grown from £1.2m to £4.8m turnover in 18 months. But as staff and subcontractors increased, admin slipped:
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Two late CIS returns
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One missed VAT payment (by 5 days)
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HMRC withdrew their gross payment status
We stepped in to:
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Challenge the penalties
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Get the CIS record back on track
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Support them with a monthly compliance service
They reapplied for gross status successfully the following year – but it could have been avoided entirely.
🧾 Need Help Protecting Your Gross Payment Status?
At Thomas Emlyn Ltd, we help construction companies stay compliant with HMRC as they grow.
Our services include:
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Monthly CIS management
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Tax payment tracking
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HMRC representation
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Annual compliance reviews
📞 Book a free call today to protect your gross payment status and keep your cash flow healthy.
📌 Final Thoughts
Gross payment status is a huge benefit for construction firms – but it’s not guaranteed. As your business scales, so does the risk of falling out of compliance.
Put the right systems in place early. Monitor your HMRC obligations closely. And get help before things go wrong.
