New change raises the bar for gross payment status (GPS).

GPS allows subcontractors to be paid gross under the construction industry scheme (CIS), without deduction of withholding tax. To gain GPS, there are currently three tests. A compliance test requires all CIS and direct tax affairs, and all returns and payments (excluding income tax self-assessment and corporation tax self-assessment payments) to be up to date. There is also a business test and a turnover test.

From 6 April 2024, VAT is added to the list of taxes in the compliance test, and subcontractors must show they have complied with VAT obligations to obtain and keep GPS. The first review of GPS compliance will take place earlier, at six months after application, rather than 12. The new rules also provide for HMRC to cancel GPS at once if it has reasonable grounds to suspect fraud involving VAT, corporation tax, income tax or PAYE.

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Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.