HMRC has recently issued guidance regarding the changes to its gross payment compliance test.
Gross payment status allows a contractor to recevie the full payment of an invoice without having to deduct CIS tax.
The current compliance test requires the following:
to have filed and paid tax and NI/PAYE on time for the previous 12 months (compliance test)
falls under the CIS regime and has a bank account (business test)
requires a turnover of at least £30k if a sole trader, partnership or company (turnover test)
New VAT compliance test
The new, additional fourth test relates to VAT compliance. The contractor needs to ensure their VAT returns are filed and paid on time to meet this new test.
The test is more focused on non-compliance regarding items such as late filing/late payment.
HMRC will allow some flexibility to avoid removing contractors for non-compliance. Therefore, you will be permitted the following:
You can file up to 3 late submissions of VAT returns but only if they are no more than 28 days late, or
the contractor can make a late payment but only where the VAT liability is less than £100 and paid no more than 14 days late.
If you would like any help or support in registering for gross status, please contact us on 0800 131 0 131 or email cis@rollpay.co.uk
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