CIS Gross Payment Complacency Costs Company its Status

A recently contested case in the Supreme Court, has highlighted the importance of not becoming complacent in keeping up to date with HMRC obligations in respect of any business that has been awarded with Construction Industry Scheme (CIS) gross payment status.

Following a breakdown in compliance, HMRC had taken the decision to cancel Water Well Engineers CIS gross payment status.

Water Well Engineers had argued that the impact of such a decision would mean a 60% loss to its turnover, which in turn would lead the company to be forced to dismiss around 80% of its employees. The repercussions of such an action would likely mean that it would take the company up to ten years to recover.

In listening to all the arguments set out, the Supreme Court disagreed with Water Well Engineers plea and stated that gross status registration was a privilege, with significant economic advantages, however with the stringent conditions attached there was always going to be a risk of cancellation to any organisation that did not comply.

This case really highlights the need to make sure that any business that has qualified for CIS gross payment status, stays fully compliant with all of its compliance obligations. Failure to do so will undoubtedly place the business at real risk of losing it.

In particular, a business with gross payment status should ensure that it pays all of its tax bills on time and that all returns are filed by their due dates.

With over 150 years of accountancy, tax and business acumen, Mitchells are perfectly placed to offer guidance and advice in this complex area. If you would like a CIS gross payment status review, then please contact Mitchells Tax & Employer Solutions Manager – Liz Fisher on 01246 580 722

Further details of the court case can be seen here.