Losing your CIS Gross Payment Status can feel like a sudden blow, especially if your construction business has relied on receiving payments without deductions. It can lead to serious cash flow issues, damaged client relationships, and unexpected stress.
But why did HMRC revoke your gross payment status? And more importantly, how can you fix it?
In this blog, we’ll explore the main reasons why construction businesses lose their CIS gross status, and how to regain it quickly.
🚩 What is CIS Gross Payment Status?
Under the Construction Industry Scheme (CIS), gross payment status allows contractors to be paid in full (without tax deductions). To achieve this status, businesses must prove to HMRC that they:
-
Pay their tax on time.
-
Submit all returns punctually.
-
Meet specific turnover and compliance criteria.
If HMRC believes you’re no longer meeting these standards, your gross payment status can be withdrawn immediately.
🔍 Top 5 Reasons You Lost Your Gross Payment Status
1. Late or Missed CIS Returns
HMRC expects monthly CIS returns to be submitted promptly, by the 19th of each month. Even one or two late returns can jeopardise your gross payment status.
What to do:
-
Always file CIS returns early.
-
Use automated CIS software or outsourced support to stay compliant.
2. Late Tax or National Insurance Payments
Consistent, timely payment of taxes and National Insurance Contributions (NICs) is vital. Late payments, even minor ones, signal non-compliance to HMRC.
What to do:
-
Set up Direct Debits for VAT, PAYE, and NIC payments.
-
Monitor HMRC online accounts closely.
3. Outstanding HMRC Debts
If you owe HMRC money, for VAT, PAYE, CIS deductions, or corporation tax, you risk losing gross payment status.
What to do:
-
Immediately contact HMRC to arrange payments.
-
Clear all outstanding debts promptly.
4. Failing HMRC’s Compliance Tests
HMRC regularly reviews your compliance history over a rolling 12-month period. Too many small errors or delays can trigger a loss of your gross status.
What to do:
-
Regularly review your tax position.
-
Run quarterly compliance checks.
5. Drop in Business Turnover
To maintain gross payment status, your construction business must meet certain annual turnover thresholds (typically at least £30,000 per director or £100,000 for companies).
What to do:
-
Monitor your turnover regularly.
-
Communicate proactively with HMRC if turnover temporarily dips.
📅 How Long Will It Take to Get Gross Status Back?
If you’ve lost your CIS gross status, you must usually wait at least 12 months before reapplying. During this period, you’ll face standard CIS deductions (usually 20%), significantly affecting your cash flow.
However, if you believe HMRC’s decision was incorrect or unfair, you can:
-
Appeal the decision (within 30 days).
-
Provide evidence of compliance to expedite restoration of your status.
✅ How to Prevent Losing CIS Gross Status Again
Here’s how you can ensure it doesn’t happen again:
-
Automate CIS returns, reduce human error.
-
Set calendar reminders for all tax deadlines.
-
Pay all HMRC bills by Direct Debit to ensure timely payment.
-
Review your compliance quarterly to quickly identify and fix issues.
💡 Get Professional Help: Regain Your Gross Payment Status Faster
At Thomas Emlyn Ltd, we specialise in helping construction businesses keep, and regain, their CIS gross status.
We can support you by:
-
Liaising directly with HMRC on your behalf.
-
Setting up robust compliance processes.
-
Ensuring your monthly CIS returns and tax payments are always on time.
📞 Book a discovery call today for a confidential review and get your gross status back on track.
📌 Final Thoughts
Losing CIS gross status is frustrating, but understanding why it happened is the first step toward fixing it, and preventing it in the future.
Stay organised, stay compliant, and don’t hesitate to get professional help if you need it.
