Phase 1: Understanding what is at stake

You worked hard to get your gross payment status (GPS). You met the turnover test, passed the compliance test, and can now receive 100% of your construction payments without deductions. But GPS is not permanent.

Allow 15 minutes to complete this learning path. By the end, you will understand how HMRC reviews your GPS, what can cause you to lose it, and the practical steps to protect your status.

Why GPS maintenance matters

Losing GPS has an immediate and significant impact on your cash flow:

With GPS: You receive 100% of contract payments
Without GPS: Contractors deduct 20% from every payment
Cash flow impact: On 100,000 pounds of annual contracts, losing GPS means 20,000 pounds less cash in your bank account until you reclaim it through Self Assessment

Beyond cash flow, losing GPS can affect your relationships with contractors and your ability to take on larger projects that require upfront material costs.

Cancellation vs revocation: know the difference

If HMRC withdraws your GPS, the consequences depend on whether your status is cancelled for compliance failures or revoked for fraud. This distinction is critical. (The legislation calls both actions "cancellation" - FA 2004 section 66 - but the grounds and the bar on reapplying differ sharply.)

The critical difference

Understanding these two outcomes helps you appreciate why protecting your GPS is so important.

GPS withdrawal has two distinct forms with very different consequences. Understanding the difference is essential for managing your business's cash flow and compliance strategy.

Cancellation occurs when you fail to meet the ongoing compliance requirements. Revocation is reserved for more serious matters such as fraud, providing false information, or persistent non-compliance.

Note on terminology: the legislation calls both forms "cancellation" (Finance Act 2004, section 66) - "revocation" is the plain-English label used here for the immediate, fraud-based form. The 5-year reapplication bar applies to fraud-based withdrawals taking effect on or after 6 April 2026 (section 66(7), inserted by the Finance Act 2026). For earlier withdrawals of any kind the bar is 1 year.

GPS cancellation: 1 year wait before reapplying (typical compliance failures)
GPS revocation: 5 years wait before reapplying (fraud or false information; withdrawals taking effect on or after 6 April 2026)
Notice period: 90 days written notice before cancellation takes effect
Appeal deadline: 30 days from decision to request a review
Immediate effect: Revocation can take immediate effect in cases of fraud

When GPS is cancelled (1 year wait)

HMRC will cancel your GPS if you fail the annual compliance test. This typically happens when you have:

Filed Self Assessment, CIS, or VAT returns late (beyond the permitted minor failures)
Failed to pay PAYE, National Insurance, CIS deductions, or VAT on time
Outstanding tax debts without a Time to Pay arrangement
Failed to supply information requested by HMRC
Failed to meet Companies Act requirements (for limited companies)

After cancellation, you must wait 12 months before you can reapply for GPS. During this period, you revert to net payment status (20% deductions).

When GPS is revoked (5 year wait)

HMRC will revoke your GPS for more serious matters:

Providing false or misleading information when applying for GPS
Tax fraud or deliberate non-compliance
Persistent compliance failures despite previous warnings
Failure to notify HMRC of relevant changes to your business
Making or receiving payments you knew or should have known were connected to the fraudulent evasion of tax (Finance Act 2026, in force since 6 April 2026)

After a fraud-based revocation taking effect on or after 6 April 2026, you must wait 5 years before you can reapply (1 year for earlier withdrawals). This makes revocation far more serious than cancellation.

The appeals process

If HMRC decides to cancel or revoke your GPS:

Step 1: You receive a written notice explaining the decision and reasons
Step 2: You have 30 days to request a review by a different HMRC officer
Step 3: If still dissatisfied, you can appeal to the First-tier Tribunal (Tax Chamber)
Step 4: Tribunal appeals must be made within 30 days of the review decision

During the appeal process, your GPS remains in force until a final decision is made (unless the decision was for fraud, which can take immediate effect).

Cancellation trigger: Failing the compliance test at annual review
Revocation trigger: Fraud, false information, or persistent serious non-compliance
Review request deadline: 30 days from HMRC decision
Tribunal appeal deadline: 30 days from review decision
GPS during appeal: Remains in force until final decision (except fraud cases)

What you must do as a CIS subcontractor - Gross payment status (opens in a new tab)

Phase 2: Assess your compliance health

Before you can protect your GPS, you need to understand your current position. This phase helps you identify whether your GPS is secure or at risk.

When HMRC reviews your GPS

Knowing when and how HMRC checks your status helps you prepare and stay ahead of potential problems.

HMRC does not grant GPS permanently. Your status is subject to a rolling scheduled review - the Tax Treatment Qualification Test (TTQT) - run automatically for each GPS holder, first around 6 months after GPS is granted and then annually. It checks that you still meet the three eligibility tests: business test, turnover test, and compliance test. Reviews are not clustered at a fixed point in the year, so you must stay compliant year-round.

Scheduled review (TTQT): Rolling per holder - first around 6 months after GPS is granted, then annually
Compliance test period: 12 months preceding the review date
VAT compliance: Included from 6 April 2024 (SI 2024/308)
Notice before cancellation: 90 days written notice
Review method: Automated check against HMRC records

What HMRC checks during the scheduled review

At each TTQT review, HMRC runs the compliance test against their records for the previous 12 months:

Self Assessment returns filed on time
CIS monthly returns filed on time (if you are also a contractor)
VAT returns filed on time (from April 2024)
PAYE, National Insurance, CIS deductions, and VAT paid on time
Companies Act compliance (accounts and confirmation statements)
Information requests responded to within required timeframes
No outstanding tax debts (or an agreed Time to Pay arrangement)

Minor failures allowed

HMRC allows some tolerance for minor administrative errors:

Up to 3 late CIS returns (each no more than 28 days late)
Up to 3 late VAT returns (each no more than 28 days late)
Up to 3 late payments of GBP100 or more (each no more than 14 days late, per tax type)
Any late payment under GBP100
Self Assessment return up to 28 days late (one permitted)

Exceeding these tolerances will trigger GPS cancellation.

Late CIS returns permitted: Up to 3 (each no more than 28 days late)
Late VAT returns permitted: Up to 3 (each no more than 28 days late)
Late payments permitted: Up to 3 of GBP100+ (each no more than 14 days late)
Small payment tolerance: Any late payment under GBP100 does not count
Late Self Assessment: 1 permitted (up to 28 days late)

What triggers an immediate review

Outside the rolling cycle, HMRC may review your GPS immediately if:

You fail to file a required tax return
You have significant unpaid tax debts
HMRC receives information suggesting fraud or non-compliance
You fail to respond to an information request
Your business structure changes (for example, new directors or shareholders with control)
HMRC believes you made or received payments connected to supply chain fraud (Finance Act 2026, since 6 April 2026)

Warning signs your GPS may be at risk

Watch for these indicators that HMRC may cancel your GPS:

Late filing of any CIS, VAT, or Self Assessment return
Late payment of PAYE, NI, CIS deductions, or VAT
Outstanding tax debt without a Time to Pay arrangement
Correspondence from HMRC requesting information
Penalties issued for late filing or payment
An HMRC compliance check or enquiry into your affairs

How to check your GPS status

You can check your current CIS registration status:

Online - sign in to your Business Tax Account and check your CIS registration details
Contractor verification - ask a contractor to verify you - they will see your current status (gross, net, or unregistered)
HMRC contact - call the CIS helpline (0300 200 3210) with your UTR to confirm your status

If you are unsure about your compliance record, check your tax account online to see any outstanding returns or payments before your next scheduled review.

CIS helpline: 0300 200 3210
International: +44 161 930 8706
Online check: Business Tax Account - CIS registration details
Contractor verification: Contractors see your status when they verify you

What you must do as a CIS subcontractor - Gross payment status (opens in a new tab)

Self-assessment checklist: Is your GPS at risk?

Answer these questions honestly to assess your current compliance health:

Filing compliance

Have you filed all Self Assessment returns on time in the last 12 months?
Have you filed all VAT returns on time (remember: VAT is now part of the GPS test from April 2024)?
If you are also a contractor, have you filed all CIS monthly returns on time?
For limited companies: Are your Companies House accounts and confirmation statements up to date?

Payment compliance

Have you paid all PAYE, National Insurance, and CIS deductions on time?
Have you paid all VAT on time?
Do you have any outstanding tax debts without a Time to Pay arrangement?
Have you received any late payment penalties in the last 12 months?

HMRC interactions

Have you responded to all HMRC information requests within the required timeframe?
Are you subject to any ongoing compliance enquiry or investigation?
Have you received any penalty notices for late filing or payment?

If you answered "no" to any of these questions, your GPS may be at risk. Continue through this journey to learn how to address issues before your next annual review.

Phase 3: Set up protective measures

Keeping GPS requires proactive management throughout the year, not just reacting when problems arise. This phase covers the systems and habits you need to protect your status.

Keeping your CIS gross payment status

Comprehensive guide to GPS maintenance including deadline management, warning signs, and what to do if you receive a cancellation notice. This is the core reference for GPS holders.

Key protective actions

1. Create a compliance calendar

Set reminders at least one week before every deadline:

Self Assessment: 31 January (online) or 31 October (paper)
VAT returns: Quarterly deadlines (1 month and 7 days after quarter end)
CIS returns: 19th of each month (if you are also a contractor)
Corporation Tax: Filing 12 months after period end; payment 9 months and 1 day
Companies House: Annual accounts and confirmation statement deadlines

2. Set aside money for tax

With GPS, no deductions are made from your payments. You must set aside money yourself:

Transfer 20-30% of each payment received into a separate account for tax
Do not treat this money as available for business expenses
Budget based on your likely tax bill, not just the 20% that would have been deducted

3. Pay electronically before deadlines

Allow processing time for payments:

Bacs payments: Allow 3 working days
Faster Payments: Usually same day, but allow 1 day buffer
CHAPS: Same day, but expensive - use for emergencies only

4. Review your compliance record monthly

Do not wait for the annual review. Log in to your HMRC business tax account monthly to check:

All returns show as filed
No outstanding payments are recorded
No penalties or interest charges are showing

If anything looks wrong, contact HMRC immediately to resolve it.

Phase 4: Understand the compliance thresholds

HMRC allows some tolerance for minor administrative errors. Understanding exactly what is permitted helps you know when you are still safe and when you have a problem.

What triggers immediate review

Outside the annual cycle, HMRC may review your GPS immediately if:

You fail to file a required tax return
You have significant unpaid tax debts
HMRC receives information suggesting fraud or non-compliance
You fail to respond to an information request
Your business structure changes (e.g., new directors or shareholders)
You are connected to a supply chain fraud investigation

April 2024 change: VAT compliance now counts

From 6 April 2024, the GPS compliance test includes VAT. This is a significant change:

Late VAT returns count towards your compliance failures
Late VAT payments count towards your payment failures
Outstanding VAT debts (without a Time to Pay arrangement) can trigger cancellation

If you are VAT registered, your VAT compliance is now as important as your Self Assessment compliance for keeping GPS.

Apply for CIS gross payment status

Review the original GPS requirements to ensure you continue meeting them. Understanding what HMRC tests for helps you stay compliant.

Phase 5: If your GPS is threatened

Despite your best efforts, you may find yourself at risk of losing GPS. This phase covers how to respond to threats and recover if the worst happens.

If you are struggling to pay on time

Contact HMRC before the deadline if you cannot pay a tax bill. You may be able to arrange a Time to Pay (TTP) agreement:

Payments made within a TTP schedule are not counted as late
Your GPS compliance test may not be affected, provided you stick to the arrangement
HMRC may still charge interest on the outstanding amount

Contact the Business Payment Support Service on 0300 200 3835 as soon as you know you will have difficulty paying. The earlier you contact them, the more options you have.

If you receive a cancellation notice

If HMRC notifies you that your GPS will be cancelled:

Check the reasons carefully: Verify HMRC's information is accurate. Their records sometimes have errors.
Decide whether to appeal: You have 30 days to request a review. Appeal if HMRC's records are incorrect, there was a reasonable excuse for failures, or HMRC failed to follow proper procedures.
Prepare for the cash flow impact: If cancellation proceeds, you will revert to 20% deductions. Notify your bank and finance providers if you have loans or credit facilities.
Plan your re-application: After cancellation (not revocation), you must wait 12 months before re-applying. Use this time to build a clean compliance record.

Contingency planning: Managing without GPS

If you lose GPS, you need to manage the transition to net payment status. Understanding how to optimise your cash flow under deductions will help you recover.

Managing cashflow when CIS deductions are taken

Practical strategies for managing your business when 20% is deducted from every payment. Essential reading if your GPS is cancelled or while you work to regain it.

Summary: Your GPS maintenance checklist

Keep your GPS by following these ongoing practices:

Keep and maintain your gross payment status