- 128 City Road, London, United Kingdom, EC1V 2NX
- enquiries@wingateaccountants.co.uk
- 01615314179
Since 6 April 2026, HMRC can strip gross payment status, recover lost tax and charge 30% penalties if your business knew or should have known a payment was linked to fraud. Good checks and good records are now your best defence.
Fully registered and compliant to act on your behalf.
These powers apply to payments made on or after 6 April 2026.
No warning and no waiting for the annual compliance review.
Make your business pay tax a fraudster in the chain did not pay.
Charged on the business and potentially its directors personally.
The wait to reapply for gross payment status rises from one to five years.
The test has been used for VAT fraud for years. From 6 April 2026 it also applies to the Construction Industry Scheme, through new sections inserted into the Finance Act 2004 by the Finance Act 2026. If HMRC can show that your business made or received a payment and knew, or should have known, that it was connected to the fraudulent evasion of tax, three things can follow:
After gross payment status is removed on these grounds, you must wait five years before reapplying. Before April 2026 the wait was one year. For a contractor who relies on being paid gross, that can be a serious cash flow problem.
HMRC says organised fraud in construction labour supply chains is still costing billions. A common pattern is a labour company that collects payments, does not pay over its tax and then folds, often reappearing under a new name. The government expects the new measures to raise around £765 million by 2030/31.
Any business in a CIS chain. Main contractors, labour agencies, groundwork and trade subcontractors, and even subcontractors who pay their own sub-subcontractors. Checking that a subcontractor is registered with HMRC is still required, but it is no longer enough on its own. HMRC will look at whether the deal made commercial sense and whether there were warning signs you ignored.
The answer is documented due diligence. If HMRC asks, you need to be able to show what you checked, when, and what you did about anything unusual. The checklist below is a good starting point. We can help you build it into your monthly CIS routine so it takes minutes, not hours.
Do these before the first payment and repeat them regularly.
Verify every subcontractor’s CIS status before paying them, and keep the verification number.
Look for brand new companies, recent director changes, overdue accounts or strikes off.
Confirm VAT registration and that reverse charge invoices are correct.
Prices well below market, frequent bank detail changes, or pressure to pay third parties.
Labour-only suppliers should show who their workers are and how they are paid.
Keep dated notes of every check and every question you asked.
Unchanged in 2026, but HMRC applies them strictly.
You carry out construction work, or supply labour for it, in the UK and run your business through a bank account.
At least £30,000 net turnover for a sole trader; for partnerships and companies £30,000 per partner or director, or £100,000 in total, excluding VAT and materials.
Your tax returns and payments, including VAT since April 2024, must have been on time over the last 12 months.
Transparent pricing, confirmed in writing before any work begins. No hourly charges and no surprises.
Work directly with a qualified accountant who knows your affairs, never a call centre.
Responsive support by phone, email and WhatsApp, with clear advice in plain English.
Experienced with Xero, QuickBooks, FreeAgent and Sage, as well as spreadsheet records.
Share a few details and a qualified accountant will reply with a fixed-fee proposal, usually within one working day. All prices include VAT.
Request your quoteWhatsApp 0161 531 4179We work with the UK’s leading accounting and tax software, so you can keep the tools you know, or we can help you choose and move to the right one.
Wingate Accountants Ltd is an independent firm of Chartered Certified Accountants, providing tax and compliance services to individuals and businesses across the UK.
✔ HMRC Registered Tax Agent
✔ Companies House ACSP (Authorised Corporate Service Provider)
✔ Data Protection registration No. ZB868558
✔ Fully AML compliant
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