CIS: how you can lose gross payment status overnight

New rules took effect on 6 April 2026. If a business makes or receives a payment it knew or should have known was connected to fraud, HMRC can act fast.¹

• It can remove gross payment status immediately.
• It can assess the related tax loss.
• It can charge a 30% penalty.
• Those removed for fraud or serious non-compliance cannot reapply for five years.

The test that should worry you

The key words are 'should have known'. Ignorance is not a full answer. If a labour supplier's deal looks too cheap, it is your job to ask why.

Checks to keep on file

• Verify every subcontractor with HMRC.
• Check Companies House for age, directors and filings.
• Be wary of newly formed labour suppliers with very low rates.
• Pay only to accounts in the supplier's own name.
• Keep notes showing the checks you did.

Do not forget the basics

Monthly returns are due by the 19th. A return one day late costs £100, rising to £200 at two months. A wrong employment status on a return can bring a penalty of up to £3,000.²