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October 2017
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Alert: Construction Industry Scheme (CIS) Gross Status


By: Paul Milton Date: 21 March 2017
Category: Alert,Tax

A number of companies struggle with cashflow problems due to CIS tax suffered, this can be avoided by applying for gross status.

Standard CIS companies
Currently companies have tax deducted from the labour element of their income, which can be offset against PAYE or CIS tax deducted from it’s employees or sub contractors.

There may not be sufficient liabilities to use all the tax credit suffered so cashflow will be affected.

The surplus is only refunded after 5 April each year, when the final end of year reports are processed. This can still take several months before payment is received.

Gross status
A company can apply for gross status which results in not having the tax deducted in the first place so they receive the payment for work done in full.

Application and eligibility
There are limits which must be exceeded to apply for this, which are broadly net turnover (total income less materials) of £30,000 per annum per shareholder/director so for a typical husband and wife company this is £60,000. There is an alternative test of £100,000 overall. The company does not have to wait 12 months to apply, they can do so as soon as they reach the turnover limit, which in some cases can be when a single invoice is paid.

If you would like to discuss the gross status application please contact Paul Milton.
 
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