HMRC Is Cracking Down on CIS Fraud. Protect Your Gross Payment Status Before It Is Too Late
HMRC has sent a clear message to the construction industry: supply-chain compliance is no longer optional.
From 6 April 2026, HMRC has stronger powers to tackle fraud within the Construction Industry Scheme. If a business makes or receives payments that it knew or should have known were connected to fraud, HMRC can take serious action.
What Can HMRC Actually Do?
Under the updated rules, HMRC can:
- Immediately remove Gross Payment Status.
- Make a business liable for lost tax.
- Charge a penalty equal to 30% of the lost tax.
- Apply penalties to the business, directors or connected persons.
- Prevent a business from reapplying for Gross Payment Status for up to five years in certain cases.
For many subcontractors and construction businesses, losing Gross Payment Status could be devastating to cash flow and the future of the business.
Read more: CIS Nil Returns Are Back, Is Your Construction Payroll Ready?
Why Gross Payment Status Is So Valuable
Gross Payment Status allows eligible subcontractors to receive payments without CIS deductions being taken at source. Lose Gross Payment Status, and the impact can be immediate.
Payments can be reduced before they reach your account. Cash flow becomes tighter. Admin increases. Clients and contractors may ask difficult questions. In construction, cash flow is everything and gross payment status helps protect it.
The New Risk: Your Supply Chain
The major shift is that HMRC is not only looking at what your business does. It is looking at who you work with. If there are discrepancies in your supply chain, HMRC may expect you to have spotted them.
That means businesses need to think carefully about:
- Who they are paying.
- Who is supplying labour.
- Whether subcontractors are properly verified.
- Whether payment arrangements look unusual.
- Whether rates seem too good to be true.
- Whether records can prove proper checks were carried out.
The days of informal, undocumented subcontractor arrangements are becoming increasingly risky.
What “Knew or Should Have Known” Means in Practice
It means HMRC may not need to prove that a business deliberately participated in fraud. It may be enough for HMRC to argue that the business should have noticed the warning signs. For construction firms, agencies and subcontractors, that makes good record-keeping essential.
You need to be able to show:
- Subcontractors were verified.
- Deductions were applied correctly.
- Payments were recorded accurately.
- Payroll processes were consistent.
- Supply-chain checks were not ignored.
A well-run payroll process is now one of the strongest defences a construction business can have.
How We Help Construction Businesses Stay Ahead
This is where Centurion Payroll stands apart.
Centurion Payroll is a construction payroll specialist, supporting contractors, agencies and subcontractors with CIS payroll services designed around the realities of the industry.
Centurion understands that construction payroll is fast-moving, high-pressure and detail-heavy. Workers need paying correctly. Contractors need reliable records. HMRC requirements need to be met. Cash flow needs protecting.
Centurion helps bring structure, accuracy and confidence to your CIS payroll process.
Do not wait until HMRC asks questions. Get your CIS payroll in order now.
Call: 01684 584793
Email: accounts@centurionpayroll.co.uk