Loss of CIS gross payment status—practical considerations for sub-contractors
Loss of CIS gross payment status—practical considerations for sub-contractors

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Loss of CIS gross payment status—practical considerations for sub-contractors
  • Consider appealing HMRC's determination
  • Time limit for appealing
  • Grounds for appeal
  • Is the CIS 308 valid?
  • Challenging the validity of CIS 308—are the reasons valid?
  • Are the failings sufficiently clearly explained?
  • Did the failings actually occur?
  • Did the failings occur in the 'qualifying period'?
  • Are the failings treated by regulations as acceptable?
  • More...

One of the most common reasons for sub-contractors losing their gross payment status is failure to satisfy their tax compliance obligations, such as failing to submit tax returns or failing to account for pay as you earn (PAYE), as well as failing to satisfy their Construction Industry Scheme (CIS) obligations.

As noted in: Construction industry scheme—sub-contractors' obligations, those registered for gross payment are subjected to an annual review (also known as the tax treatment qualification test or ‘TTQT’) to check whether it is still appropriate for them to retain their gross payment status.

Normally, gross payment status is revoked with effect from 91 days after the date of the determination. Form CIS 308 is the document that notifies the sub-contractor of HMRC's determination to revoke its gross payment status. The legislation refers to the cancellation taking effect 'from the end of a prescribed period after the making of the determination'. Since the cancellation has no effect during the 90-day prescribed period, it takes effect 91 days after the date of the cancellation notice.

Revocation takes effect immediately if, for instance, a sub-contractor fraudulently makes an incorrect return or acquires gross payment status on the basis of false information.

This Practice Note sets out a number of practical issues, and potential grounds for appeal, that a sub-contractor (and its adviser) may wish to consider when faced with potentially losing

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