Gaining Gross Payment Status from HMRC

[mrsxllifts]

Hi

We have just diversified within our industry and picked up a very nice contract with a well known company.

All was going well til they wanted to pay us, when we discovered that the new area we have gone in to falls under the CIS regulations. So as a limited company and (hopefully) fulfilling the requirements we applied for 'gross payment' rather than having 20% deducted at source. I was told by the rather unhelpful guy at HMRC that they would have to go and check all our details out and we would hear from HMRC when they had made a decision. I asked roughly how long does this take and I got the usual 'I can't say' answer.

So has anyone had to go through this and/or have any idea how long we are likely to have to wait? All we want to know is does it usually 2 weeks, 6 weeks, 6 months? Just some idea, so we know whether to take the 20% deduction now and sort it out at the end of the year or hang on and start as we mean to go on with no deduction.

Hope this makes sense.

Thanks

Hannah

[mrsxllifts]

Anyone? Just a guesstimate would be good? Pretty please?

[LC23]

Hi Hannah. Likely to be a few weeks - it's usually the way for the clients we see make the application. Make sure you are ultra squeaky clean on the CIS front. You want gross payment status and to keep it that way.

[Eric Mc]

Poor you.

You will find that the world of CIS is a complete minefield.

If you have been late in paying ANY form of tax (Corporation Tax, PAYE, Stamp Duty, etc etc) over the last 12 months, they could very well deny you the ability to work on a Gross Receipt basis.

It's all explained here -

http://www.hmrc.gov.uk/cis/advice-sub-pay.htm

[mrsxllifts]

Thank you. It is worrying when Eric says it is a minefield!

Think we may be off to a non-starter, as we refused to pay a VAT bill after the HMRC cocked up and demanded £3000 rather than the £150 we owed! Still awaiting the apology for their 'adminisrative error'

[Hobo]

Going through the same ourselves. Set up a 'group' company which contains other companies all of which have gross payment status. The 'Group' however got denied and we are awaiting result of our appeal. They told us this could take 6 weeks.

The 20% deduction is only related to the labour element of the order though surely, not 20% of full invoice (unless you're work is all material cost).

Our problem is clients don't want to deal with people not of 'gross' status as its more complicated for them (construction industry) and they also would have to pay it over on time whereas by paying us (late) they don't. The 'Group' would turn over circa 2m in its first 12 months, and has order waiting for circa 500k. If the appeal fails we will simply accept most of orders in other companies name and put some smaller ones through the 'group' until we achieve 'gross' status.

All seems a bit odd though in circumstances.

[mrsxllifts]

Unfortunately the whole invoice amount is for labour as they supply the bits, we just build the product on site.

[Mrs Topsparks]

We have been gross payment status for years, I can remember dropping all our sales invoices, purchase invoices, bank statements etc. down to our local tax office for the tax inspector to look through them. The books were with them for about two weeks but the tax inspector most probably only took about a hour to look through them. I called them and asked them how long it would take and they seemed to get a move on then.

[Benzman]

Hi Hannah

I am the Finance Director of a Group of companies who operate within the construction industry, we recently applied for Gross Payment Status for a new subsidiary that I formed and it took them 10 weeks to respond with the question "we need more information", this was given and it took a further 8 weeks to obtain approval, despite the fact that we already have six other group companies with Gross Status.

As Eric said you must be up-to-date with all of your tax payments over the past twelve months (I don't think your issue with the VAT comes into it but your PAYE/NI, Corporation Tax, etc., must have been paid on time)

If you are suffering 20% deductions from your receipts you can off-set any deductions you make from your sub-contractors against this sum, but please make sure all of your accounting records are up to speed in order to (a) ensure that you are off-setting the correct amount and (b) you can prove the same should our friends at HMRC challenge you on the amounts off-set.

[Tuscanless Ali]

When I started at my job, IR had just taken away the gross payment status, as the previous girl hadn't filed any returns for the first 6 months of the year (When it all changed from doing it once a year to every month.) I sent in an appeal and they dealt with it very quickly IIRC, nobody deducted us 20% so it must of taken them about 2 weeks to re-instate the status.

Sorry Hannah, not really much help as it doesn't answer how long it takes initially. All I can suggest is tell the contractor to wait until you have an answer before they pay you. If you need to be paid, the contractor will be told how much (If any) to deduct and then you can deduct this from anything you owe the IR for PAYE/CIS as has already been suggested.

[JohnSpinola]

I have faced a similar situation but in a different scenario. Some really really basic stuff I found here http://www.churchill-knight.co.uk/blog/2016/04/how... hope that helps.

[Simpo Two]

JohnSpinola said:

I have faced a similar situation but in a different scenario. Some really really basic stuff I found here http://www.churchill-knight.co.uk/blog/2016/04/how... hope that helps.

Arrooyah! I'm taking bets that JohnSpinola works for said company. What odds gentlemen?