Limited company in the construction industry

Paisley Registered Posts: 93 Regular contributor ⭐
A partnership operates as both a contractor and a subcontractor in the construction industry. The partnership receives its payments gross and then deducts 20% tax before paying any subcontractors each month.

If the partnership were to end and a limited company formed instead, would the limited company be able to receive its payments gross from the start of trading and not net of 20%?

Any thoughts would be appreciated.


  • clegganator
    clegganator Registered Posts: 184 Dedicated contributor 🦉
    Well, assuming it would still pass the gross payment test, it would just be a case of if HMRC would allow you to go straight onto gross payment status. If you can prove that it's a continuation of the trade and just a change of legal entity they should be OK with that. Having a good track record of making payments on time would help as well.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    I'm with clegg on this one. I don't see why the company can't get gross status if the p'ship has it already.

    But as you well know, CIS is not my forte ;)
  • Paisley
    Paisley Registered Posts: 93 Regular contributor ⭐
    Thanking you both.

    I'm trying to find this out with HMRC now.
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