If you hold Gross Payment Status (GPS) under the Construction Industry Scheme, the margin for error just got smaller.
Changes to CIS compliance taking effect in 2026 tighten the rules around GPS eligibility, increase HMRC’s powers to revoke it, and make reapplication harder if you lose it. For construction contractors and intermediaries who depend on GPS for cash flow, this demands immediate attention.
What’s Changing
HMRC has been signalling a harder line on CIS compliance for some time. The 2026 changes make that concrete:
- Stricter GPS compliance tests. HMRC is applying tighter thresholds to the existing compliance test, which requires a clean record of tax returns, payments, and CIS obligations. Minor lapses that might previously have been overlooked could now trigger a review.
- Faster revocation. HMRC can revoke GPS more quickly where it identifies non-compliance. The burden of proof sits with the contractor to demonstrate they’ve returned to full compliance before reapplying.
- Broader data-matching. CIS returns are being cross-referenced against other tax data more systematically. Discrepancies between what a contractor reports and what their supply chain submits will be flagged automatically.
Why GPS Matters
Losing Gross Payment Status means your payments from contractors higher up the chain are subject to CIS deductions at source, typically 20% or 30%. For businesses operating on tight margins, that’s a significant cash flow hit. You’ll get the money back eventually through your tax return, but the gap can cause real operational damage.
Reapplying for GPS after revocation isn’t straightforward. HMRC requires evidence that the compliance failure has been fully resolved, and processing times can stretch for months. Prevention is considerably cheaper than cure.
What You Should Do Now
Review your compliance record. Check that all CIS returns, self-assessment filings, and PAYE submissions are up to date. Even small oversights, a late return, a missed filing, can trigger the compliance test.
Verify your payroll provider’s processes. If you use a payroll provider for CIS processing, confirm they maintain proper audit trails, file returns on time, and operate to an independently verified standard. FCSA-accredited CIS payroll providers are assessed against exactly these criteria.
Document everything. If HMRC does open a review, having a clear, documented compliance trail significantly strengthens your position. Keep records of all filings, payments, and correspondence.
The changes are designed to ensure CIS operates as intended: collecting tax accurately across construction supply chains. Contractors who already take compliance seriously have less to worry about. Those who don’t need to act before HMRC acts for them.
Find an FCSA-accredited CIS payroll provider at fcsa.org.uk/members or contact us at info@fcsa.org.uk
