Accessibility links

You are using an outdated browser. Upgrade your browser today for a better experience of this site and many others.

Gross Payment Status: How to Qualify and What You Lose If HMRC Revokes It

Learn how to qualify for CIS Gross Payment Status in 2026/27, the three HMRC tests, and what happens if it gets revoked. Expert advice from YRF Accountants, Bolton & Manchester.

Call 01204 938696 or email info@yrfaccountants.com

Gross Payment Status (GPS) is one of the most valuable benefits available under the Construction Industry Scheme. It allows contractors and subcontractors to be paid in full, with no CIS deduction taken at source, freeing up cash flow that would otherwise sit with HMRC until your next tax return.

But Gross Payment Status is not a one-off award. HMRC reviews compliance annually and losing it can hit your cash flow hard and overnight. This guide explains exactly how to qualify, and what happens if HMRC revokes your status. YRF Accountants help construction businesses across Bolton, Manchester, and Bury secure and protect Gross Payment Status year after year.

What Is Gross Payment Status and Why Does It Matter?

Under standard CIS rules, contractors deduct 20% (or 30% for unregistered subcontractors) from every payment before passing the balance. With Gross Payment Status, that deduction disappears entirely. You are paid the full contract value, and you settle your tax liability yourself through Self-Assessment or Corporation Tax.

For growing construction businesses, this difference is significant. Holding onto an extra 20% of turnover throughout the year, rather than waiting for it back via a tax return, materially improves working capital for materials, wages, and growth.

How to Qualify for Gross Payment Status: The Three HMRC Tests

To be granted Gross Payment Status, HMRC requires you to pass three separate tests, applied at the point of application and reviewed annually thereafter:

HMRC Test	What It Checks
Business Test	Your business carries out construction work (or operates as a contractor) in the UK, with a genuine business bank account
Turnover Test	Net construction turnover of at least £30,000 in the last 12 months (sole traders/each partner), or £30,000 per director/£100,000 total for limited companies
Compliance Test	Tax returns, CIS returns, and payments to HMRC have been made on time over the past 12 months, with limited exceptions

All three tests must be passed together. A strong turnover with a poor compliance record, or vice versa, will still result in a rejected or revoked application.

How to Apply for Gross Payment Status

You can apply for Gross Payment Status at the same time as registering for CIS, or at any point afterwards via your HMRC online business tax account.

HMRC will review your turnover figures, business records, and compliance history before confirming or rejecting the application. Many businesses find it worthwhile to have an accountant review their compliance record before applying, since even minor late filings can result in an unexpected rejection.

Why HMRC Revokes Gross Payment Status

HMRC carries out an annual compliance review for every business holding Gross Payment Status. Revocation most commonly follows:

Repeated late submission of CIS monthly returns

Late payment of Corporation Tax, PAYE, VAT, or Self-Assessment liabilities

Inaccurate or incomplete CIS returns

Falling below the minimum turnover threshold

Failure to respond to HMRC compliance checks or information requests

A single late payment will not usually trigger revocation on its own, but a pattern of missed deadlines across the review period puts your status at serious risk.

What You Lose If Gross Payment Status Is Revoked

The practical impact of losing Gross Payment Status is immediate and significant. Here is exactly what changes the moment HMRC revokes it:

With Gross Payment Status	After Revocation
Paid 100% gross by contractors	Contractors must deduct 20% (or 30% if also unregistered) from every payment
No tax tied up until Self-Assessment / CT600	Cash withheld monthly, only reclaimable via year-end return or EPS offset
Stronger cash flow for materials, wages, and growth	Working capital squeezed immediately across all live contracts
Seen as lower risk by contractors and lenders	Main contractors may treat the loss as a red flag during tender or onboarding
No immediate reapplication waits	12-month minimum wait before reapplying for Gross Payment Status

Beyond the direct cash flow hit, losing Gross Payment Status can also affect how main contractors view your business during tendering, since it is sometimes read as a signal of wider compliance issues.

Already lost your Gross Payment Status, or worried you might? YRF Accountants can help you understand why, fix the underlying issue, and prepare a strong reapplication.

Book a Free Gross Payment Status Consultation

Protecting Your Gross Payment Status Year-Round

The best protection against losing Gross Payment Status is treating compliance as an ongoing discipline rather than a once-a-year concern. That means submitting CIS300 returns on time every month, paying Corporation Tax and PAYE liabilities promptly, and keeping accurate records of turnover and materials costs.

Our Compliance Services cover monthly CIS returns, payroll, and tax payment monitoring, helping construction businesses across Bolton and Manchester maintain Gross Payment Status without the constant administrative pressure.

Frequently Asked Questions: Gross Payment Status

What is Gross Payment Status under CIS?	Gross Payment Status (GPS) allows a CIS-registered contractor or subcontractor to be paid in full by contractors, with no CIS deduction taken at source, improving cash flow significantly.
What are the three tests for Gross Payment Status?	HMRC assesses the business test, the turnover test (minimum £30,000 net construction turnover), and the compliance test (a clean record of on-time tax and CIS filings over the past 12 months).
How do I apply for Gross Payment Status?	You can apply when registering for CIS, or at any time afterwards via your HMRC online account. HMRC will assess all three tests before confirming or rejecting your application.
Why would HMRC revoke Gross Payment Status?	HMRC typically revokes GPS following repeated late CIS returns, late tax payments, inaccurate returns, or failure to meet the compliance test during an annual review.
What happens immediately after Gross Payment Status is revoked?	Contractors paying you must immediately start deducting CIS tax (usually 20%) from every payment, which can create a sudden and significant cash flow gap across live contracts.
How long do I have to wait to reapply after losing Gross Payment Status?	HMRC generally requires a minimum 12-month wait before you can reapply, though this can vary depending on the reason for revocation and your subsequent compliance record.
Can YRF Accountants help me apply for or protect my Gross Payment Status?	Yes. YRF Accountants helps construction businesses across Bolton, Manchester and Bury apply for Gross Payment Status, and puts safeguards in place to protect it once granted, including deadline tracking and compliance monitoring.