Gross payment status means contractors pay you in full, with no 20% CIS deduction held back. There are three tests and most applications fail on the compliance one. This checker runs your figures against HMRC published rules, including the VAT obligations added to the compliance test on 6 April 2024.
Gross payment status eligibility checker
Nothing is sent anywhere and nothing is stored. Every rule used is set out further down the page so you can check it against HMRC guidance yourself.
1. The business test
2. The turnover test
3. The compliance test, last 12 months
What gross payment status actually changes
Under the Construction Industry Scheme a contractor deducts tax before paying you. The rate is 20% if you are registered as a subcontractor and 30% if you are not. Gross payment status takes that to 0%, so you invoice and get paid in full and settle your own tax later through Self Assessment or Corporation Tax.
It does not reduce the tax you owe. What it changes is timing, and on a labour heavy business the timing is the whole problem. A subcontractor turning over £500,000 of labour has £100,000 sitting with HMRC across the year instead of in the bank. That is why status matters more to agencies and labour only trades than to anyone supplying materials, because deductions are only taken from the labour element.
The three tests
Business test
The business must be carrying out construction work in the UK, or supplying labour for it, and must be run through a bank account. Most established businesses pass this on the day they apply.
Turnover test
This looks at net construction turnover in the 12 months before you apply. Net means your construction income excluding VAT, less the cost of materials you supplied. Only the labour and services element counts.
- Sole trader: at least £30,000.
- Partnership: £30,000 for each partner, or at least £100,000 for the partnership as a whole.
- Limited company: £30,000 for each director, or at least £100,000 for the company as a whole. For a close company HMRC counts beneficial shareholders as well as directors.
The alternative £100,000 route is the reason a four director company does not need £120,000. Whichever figure is lower is the one you have to clear. HMRC also looks at the pattern across the year rather than a single large contract, so one windfall job on an otherwise quiet twelve months is unlikely to carry an application.
Compliance test
This is where applications fail. HMRC looks at whether every return was filed and every payment made on time in the qualifying twelve months, across CIS, PAYE, Self Assessment, Corporation Tax and, since 6 April 2024, VAT. For a company it also looks at the personal tax history of the directors, not just the company.
It is not as absolute as it sounds. Regulations set out specific failures HMRC is allowed to overlook, and the checker above uses exactly this list.
What HMRC can and cannot overlook
These are the published tolerances. Anything outside them means refusal unless you can show a reasonable excuse for that specific failure.
Failures HMRC can disregard
| Obligation | Allowed |
|---|---|
| CIS300 monthly returns | Up to three filed late, each no more than 28 days late |
| VAT returns | Up to three filed late, each no more than 28 days late |
| Payments of CIS, PAYE or VAT of £100 or more | Up to three late, each no more than 14 days late, counted separately for each tax |
| Payments of CIS, PAYE or VAT under £100 | Any number, any lateness |
| Self Assessment or Corporation Tax returns | Filed no later than 28 days after the due date |
Failures HMRC cannot disregard
- Four or more late CIS300 returns, or four or more late VAT returns, even where each was within 28 days.
- Any return of any type filed more than 28 days after its due date.
- Four or more late payments of £100 or more for a given tax, or any such payment more than 14 days late.
- Any late payment of National Insurance contributions. There is no allowance for this.
- Anything due in the qualifying period that is still outstanding when you apply, whether a return or a payment of £100 or more.
Late Self Assessment and Corporation Tax payments are not in the list of failures HMRC can disregard, which is worth knowing because plenty of guidance implies they are tolerated. Treat one as a problem to resolve rather than something that will be waved through.
The VAT change from April 2024
VAT compliance was added to the statutory compliance test on 6 April 2024, for both gaining and keeping the status. HMRC also gained wider grounds for immediate cancellation where it has reasonable grounds to suspect a fraudulent return covering VAT, Corporation Tax, Income Tax or PAYE, and the first compliance review for a new holder was brought forward from twelve months to six.
Regulations were amended so that minor VAT failures do not cause refusal or removal, which is where the three returns and three payments allowances above come from. For businesses that already held the status on 6 April 2024, VAT failures before that date are ignored.
Keeping it, and what happens if you lose it
HMRC runs an automated annual review called the Tax Treatment Qualification Test, and a run of late CIS or PAYE payments is the most common trigger for cancellation. Four or more late CIS300 returns can prompt a review outside the normal annual cycle, so a bad run is worth fixing straight away rather than waiting for your review date.
If you fail, HMRC issues a CIS308 notice giving 90 days before the status is removed, and you have 30 days to appeal. HMRC also writes to contractors who have paid you in the previous two years to tell them the treatment has changed. Once removed, the practical route back is twelve consecutive clean months followed by a fresh application.
How to apply
Applications are made online through your HMRC business tax account, or on paper using CIS302 for a sole trader, CIS304 for a partnership and CIS305 for a limited company. Telephone applications were withdrawn. Have your UTR and your turnover evidence ready, because the figures on the form are checked against HMRC own records rather than taken at face value.
If the answer is no, the problem is cashflow, not status
Failing the compliance test means at least twelve months at 20%. For an agency or a labour only subcontractor that is a real hole in working capital, and it is a hole that can be funded rather than absorbed.
Deductions are taken from your labour element, which is exactly the part of an invoice that invoice factoring and funded payroll advance against. If you are paying operatives weekly and invoicing clients on 45 or 60 day terms, our guide to funding for construction recruitment agencies works through the arithmetic, and our recruitment invoice finance page covers the facility itself.
Talk it through
We are not accountants and we do not submit CIS applications. What we do is fund the gap while you are on 20%, or while an application is working its way through. If deductions are holding back payroll or growth, we will tell you what is available and what it costs.
Or try our other calculators.
This checker is general information based on HMRC published guidance and is not tax advice. It cannot see HMRC records and does not decide anything. Only HMRC can grant or refuse gross payment status, and it will assess its own compliance data including the personal tax history of directors and partners. Check your position with your accountant before applying. Bolton Business Finance Ltd is not authorised or regulated by the Financial Conduct Authority and arranges non-regulated, business purpose commercial finance only. Rules verified against HMRC guidance in September 2026.