Keep your CIS gross payment status

Gross payment status means contractors pay you in full and you account for your own tax. You keep it by filing your returns and paying your tax on time. If you fail HMRC's check, you move to payment under deduction, and contractors take 20% from your payments.

Know when HMRC checks your status

HMRC runs an automated check, the Tax Treatment Qualification Test, on every holder of gross payment status. The first check runs about six months after you are granted status, and further checks run every year. HMRC picks the date at random, so you cannot predict it. Each check looks back at the 12 months before it runs.

HMRC can bring a check forward if it sees failures building up, for example when a contractor files four or more monthly returns late. If you are a company, HMRC checks the company itself, not its directors or shareholders. For a partnership, every partner with gross payment status shares one review date, and the check covers the partnership and each partner.

Meet the compliance test

Over the 12 months before each check, you must have done all of the following.

• Filed your Self Assessment returns, or your Corporation Tax returns if you are a company, on time.
• Filed your VAT returns on time. VAT has been part of the test since 6 April 2024.
• Filed your monthly CIS returns on time, if you also act as a contractor.
• Paid your CIS deductions, PAYE tax, VAT, Income Tax or Corporation Tax, and National Insurance contributions when due.
• Answered any request from HMRC for accounts or other information.
• Met your Companies Act duties, if you are a company: filing accounts and the confirmation statement, and notifying changes of directors or secretary.

Know what HMRC overlooks

Explain a failure

Before HMRC withdraws your status it must consider whether you had a reasonable excuse for each failure, and whether you put things right without unreasonable delay once the excuse ended. If HMRC writes to say you are about to fail, you can write back with your reasons. If it accepts them, you keep your status. If it does not, it tells you which conditions you missed and that your status ends 90 days later. You then have 30 days from the date of that letter to appeal. If a payment plan HMRC has agreed is in place, it does not count against you.

If you do lose status, you must wait a year before you can reapply.

Report changes to HMRC

Tell HMRC if you change your trading name or address, stop trading, or add shareholders to your company. Changing from a sole trader to a partnership or company, or the other way round, means registering for CIS again and applying again for gross payment status.

Take care in your supply chain

From 6 April 2026, HMRC can cancel gross payment status with immediate effect if you make a payment under a construction contract when you knew, or should have known, that another party to that contract, or to a connected one, had deliberately failed or would deliberately fail to deduct or pay over CIS or PAYE. It can also charge you 20% of that payment. If you file a return treating a sum as deducted and paid when you knew or should have known it was not, it can charge you that sum. A cancellation on these grounds bars you from reapplying for five years.

Stay compliant through the year

Put every filing and payment deadline in a calendar a week early, including Self Assessment, VAT and, for a company, Corporation Tax and Companies House filings. Without deductions, nothing is paid to HMRC for you, so set aside enough of each payment to cover your tax. Pay electronically and allow time for the money to arrive. Check your HMRC online account regularly for returns not filed, payments not recorded and penalties. If you cannot pay a bill on time, contact HMRC before the deadline and ask for a payment plan.

If you are also a contractor, these CIS deadlines count towards your test.