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by

Björgvin Vigfússon

CIS Gross Payment Status (GPS) Tolerance: What HMRC Really Allows (UK 2025/26)

Who this is for: UK subcontractors aiming to get/keep GPS, and developers/main contractors who want certainty that their supply chain won’t be forced into 20%/30% deductions mid-project.

Why it matters: HMRC does allow a small tolerance for late filings and payments when testing GPS, both at application and at ongoing reviews, but it’s narrow and strictly counted. Miss the limits, and GPS can be refused or withdrawn. That’s why your calendar, evidence trail, and month-end CIS processes need to be watertight—see how we align them with your CIS300 & Payment/Deduction Statements workflow and your Subcontractor verification checks.

The tolerance rules (plain English)

HMRC can overlook within the qualifying period:

  • Up to three late CIS300 returns (each under 28 days late). Your CIS routine should already be locked by the 19th/22nd cycle, see our practical flow in CIS300 & Payment/Deduction Statements.
  • Up to three late VAT returns (each under 28 days late). Because VAT now matters for GPS, make sure your DRC jobs are treated correctly, start with Reverse Charge VAT pitfalls.
  • Up to three late payments (CIS/PAYE/VAT) of £100+ (each under 14 days late) per tax. If your deductions and bank postings tie out each month, this shouldn’t bite, our CIS returns & statements in Xero/QuickBooks/Sage guide shows how to keep PDS ↔ CIS300 ↔ bank aligned.
  • Any payment under £100 late.
  • Any SA or CT return filed within 28 days of the deadline.

There’s also a small processing window for the most recent items (e.g., your last one or two CIS returns close to the check date). Don’t rely on this, it won’t rescue older misses.

Cannot be overlooked (any one of these fails the test):

  • Four or more late CIS or VAT returns (even if each is < 28 days late).
  • Any CIS/VAT/SA/CT return > 28 days late, or still outstanding at the check date.
  • Four or more late £100+ payments (< 14 days late), any such payment > 14 days late, or any amount still unpaid at the check date.
  • Late NIC payments are treated harshly—build PAYE/NIC into your month-end rhythm alongside CIS in your Compliance Calendar inside the CIS300 guide.

New for recent checks: VAT returns and payments are now part of the GPS compliance test. If you’re routinely involved in construction supplies, get your VAT treatment right where CIS and DRC overlap, use the decision flow in CIS vs VAT Domestic Reverse Charge: when both apply.

When HMRC checks you (and what happens next)

  • Applying for GPS? You must pass the Business, Turnover, and Compliance tests. Our main walkthrough How to qualify for (and keep) CIS Gross Payment Status in 2025/26, covers all three, with pre-submission prep.
  • Already have GPS? Expect a review 6 months after grant and then annually. If your counts exceed tolerance, HMRC will move to withdraw GPS. This is where airtight monthly controls verification, invoicing, CIS300 & PDS, really pay off.

If HMRC issues a withdrawal notice, respond within 30 days. Your evidence should include on-time filings, bank proofs, and where relevant, end-user letters and reverse-charge wording to show your VAT is correct (see Reverse Charge VAT pitfalls).

Worked scenarios (so you can judge your risk fast)

A) Within tolerance, keep/apply GPS

In the last 12 months you had 2 CIS300 returns filed < 28 days late, 1 VAT return < 28 days late, and 1 VAT payment £210 paid 10 days late. Nothing is outstanding.
Outcome: Within tolerance → pass. Keep your counts below three and clear everything by month-end using the checklist in CIS300 & Payment/Deduction Statements.

B) Outside tolerance, expect refusal/withdrawal

You clocked 4 CIS300 returns late, each by a few days.
Outcome: Outside tolerance → fail. One extra miss tips you over. Tighten your month-end pack and automate submissions via CIS returns & statements in Xero/QuickBooks/Sage.

C) Late by “too much”

You filed a CT600 35 days late (everything else perfect).
Outcome: Fail. Any return > 28 days late is fatal. Build Companies House/CT deadlines into the same calendar you use for CIS & VAT.

D) Processing window saves you (just)

Your two latest CIS300s were submitted right before HMRC pulled the report.
Outcome: The small processing tolerance may cover the most recent returns but don’t rely on it. Keep filing by the 19th and reconciling to PDS totals (see the worked example in CIS300 & Payment/Deduction Statements).

How to manage to the tolerance (your monthly rhythm)

  1. Employment status first. CIS isn’t status—decide PAYE vs self-employed using CEST, then proceed. Start here: CIS isn’t employment status: getting PAYE vs subcontractor right.
  2. Verify subs and set rates. Before first payment (or if they’ve dropped off your returns), verify and record the rate/verification number, see Subcontractor verification.
  3. Get the invoice base right. CIS applies to labour only; exclude materials/eligible plant from the base, use the worked examples in CIS invoice anatomy: labour vs materials.
  4. Handle VAT correctly. If DRC applies, no VAT is charged on the invoice and the customer reverse-charges on the whole supply. Avoid classic mistakes via Reverse Charge VAT pitfalls and the flow in CIS vs VAT Domestic Reverse Charge.
  5. Close the month cleanly. Issue PDS by the 19th, file CIS300 by the 19th, pay by the 22nd, and reconcile. Our software guide, CIS returns & statements in Xero/QuickBooks/Sage, shows how to lock the postings.

Strong FAQ (fast, defendable)

Does HMRC really allow some late returns/payments and still keep GPS?
Yes, but only within strict limits (e.g., up to three late CIS/VAT returns < 28 days; up to three late £100+ payments < 14 days). Cross four or go past 28/14 days and you’ll fail the compliance test.

Do NIC late payments have any tolerance?
No. Treat NIC dates as non-negotiable, fold them into the same calendar you use for CIS300 & PDS.

What changed recently for GPS?
VAT compliance is now part of the GPS test. If you run construction jobs, make sure DRC/end-user letters and wording are correct—start with Reverse Charge VAT pitfalls.

How often will HMRC check me after I get GPS?
Typically 6 months after grant, then annually. Keep your evidence trail tidy each month using our CIS300 & Payment/Deduction Statements checklist.

If HMRC moves to withdraw GPS, what happens?
You’ll usually get around 90 days’ notice and 30 days to appeal. Prep your response with filing/payment proofs and a reconciliation pack; our software playbook—CIS returns & statements in Xero/QuickBooks/Sage—helps keep evidence audit-ready.

Related guides (for deeper dives)

Next steps

Want GPS secured all year—not just on application day?
Book a 20-minute GPS Tolerance Check-up. We’ll benchmark your last 12 months against the exact tolerance lines, lock your Compliance Calendar (CIS300, VAT, PAYE/NIC), and prep a CIS308 response pack template.
You’ll leave with: a one-page GPS Tolerance Scorecard, a month-end checklist, and your next review date diarised.
→ Book now