Construction industry targeted again – additional checks for gross payment status

After the introduction of the VAT domestic reverse charge three years ago, those business owners and their finance teams will have known that it was only a matter of time before their sector was once more the focus of HM Revenue and Customs (HMRC).

What has changed?

Already in force from 6 April 2024, the current statutory tests to maintain or apply for gross payment status (“GPS”) have been extended to include VAT obligations.

What are these extra tests?

  • No one VAT return has been submitted more than 28 days late; or
  • In a 12 month-period no more than three VAT returns have been submitted late; or
  • No VAT payment which is above £100 has been paid late; or
  • There have been no more than three late payments of VAT under £100 paid over 14 days late.

If one of these is failed, GPS will be removed.

Have there been any other changes?

The first annual review date for new businesses enrolled for GPS has also been changed. HMRC has brought forward a subcontractor’s first gross payment compliance review check from 12 months to 6 months, before reverting to the standard 12-month period thereafter.

Being a contractor or a sub-contractor has always brought additional challenges.

Consulting with a tax professional who can provide guidance will help you mitigate any potential risks associated with these changes.

Please contact us for more information.

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