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Withdrawal of CIS Gross Payment Status

Newsletter issue - August 2010.

Every month the Taxman's computer reviews the tax records for a number of subcontractors in the Construction Industry Scheme (CIS) who qualify for gross payment status. This means that tax does not have to be deducted from payments made by contractors. Every subcontractor's tax record should be reviewed about once a year, but it is not possible to predict exactly when this review may be undertaken.

If the tax compliance record is regarded as unsatisfactory, taking into account the acceptable minor breaches, the computer automatically issues a letter to the subcontractor informing them that their gross payment status will be withdrawn in 90 days. This is serious stuff as the withdrawal of gross payment status can mean the loss of large contracts, as well as cash-flow difficulties.

If you have recently had problems paying your tax on time, you may have agreed a time to pay arrangement with the Tax Office.

Where the tax payments are made as per the agreed schedule, the Taxman should not issue penalties for late paid tax. Unfortunately the computer that performs the CIS review of tax records knows nothing about your time to pay arrangement, so any late payment of tax within the review period is marked as a failure. This can cause a notice of withdrawal of gross payment status.

You need to appeal in writing against that notice within 30 days of it being issued. Include in your appeal the following details:

  • the date you or your firm requested time to pay from the Tax Office;
  • which tax debts are included in the arrangement; and
  • the agreed payment amounts and dates.

Your gross payment status should be restored if there are no other late tax payments or late tax forms delivered in the review period.

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