Since the introduction of the new Construction Industry Scheme and with strengthened powers, HMRC has been quick to withdraw Gross Payment Status from contractors where they have "failed" to meet their compliance obligations.
Examples that we have seen of where Gross Payment Status has been withdrawn are:
Where the contractor owed HMRC 18 pence in outstanding corporation tax (yes, 18 pence!).
Where the contractor mistakenly believed that the monthly return had to be posted by the 19th of the month, rather than actually received by HMRC by the 19th.
Where the contractor was 10 months late in paying tax and penalties, due to a bad debt causing severe cashflow difficulties.
Where the contractor’s accounts were submitted late and the resultant penalty was also paid late. The reason for the late payment had been the migration of records from a manual to a computer system in the period.
In all the above, HMRC have acted within the scheme rules but without considering the full circumstances. We overturned all of the above cases on appeal. But it is vitally important to get the appeal in on time so that Gross Payment Status can be retained whilst the decision is under appeal.