One of the more draconian aspects of the new CIS regulations is the power of HMRC to withdraw gross payment status if they consider that a contractor’s circumstances have changed in a particular way.Under the pre-CIS rules status would generally be reviewed at renewal date. Under the new rules if an inspector is of the opinion that a contractor’s circumstances have changed so that if he applied now, he would not be granted gross payment status, then gross payment status may be withdrawn.
Obviously it is important to ensure that you stay the right side of the qualification process, in order that your gross payment status be maintained. The following compliance notes are quoted from a Revenue Fact Sheet on the topic:
“To pass the compliance test, you and any business partners (or your company and each of its directors) must, during the 12 months up to the date of the application, have done all of the following:
1. Completed and returned all tax returns sent to you.
2. Supplied any information to do with your tax that we may have requested.
3. Paid by the due dates:
. all tax due from yourself or the business
. all your own National Insurance contributions (NICs)
. any PAYE tax and NICs due from you as an employer
. any deductions due from you as a contractor in the construction industry.
When considering whether you have passed the compliance test, we will disregard, during the same 12 month period, any or all of the following.
. Three late submissions of the monthly return – up to 28 days late.
. Three late payments of CIS/PAYE deductions – up to 14 days late.
. One late payment of Self Assessment tax – up to 28 days late.
. Any employer’s end of year return made late.
. Any late payments of Corporation Tax – up to 28 days late, including where any shortfall in the payment has incurred an interest charge but no penalty.
. Any Self Assessment return made late.
. Any failures classed as ‘minor and technical’ in relation to your obligations under the old Scheme, where these fall within the 12-month period up to your application.”
If you do receive notification that your status has changed this can be appealed. Be sure to call us immediately.