CIS monthly return penalties - the end of the amnesty is nigh!

The new Construction Industry Scheme (CIS) which came into force on 6th April 2007 brings with it a requirement for contractors to submit a monthly return (CIS300). Section 98A(2)(a), TMA 1970 provides for a penalty where a contractor fails to submit a return by the due date. This applies even if the return is a ‘nil’ return. A monthly return is due within 14 days of the end of the relevant tax month, or 17 days where payment is made electronically.
 
So far, no penalties have been sought for failure to submit a return (see reg 4(13), Income Tax (Construction Industry Scheme) Regulations 2005, SI 2005/2045) because a six-month period of settling down is being allowed. However, time is now running out.
 
Any returns which are still outstanding on or after 20th October 2007 will attract a penalty right back to when the return should have been filed.
 
When the HMRC system is expecting a return these penalties will be issued by the CIS system. By this time a very large penalty bill could have accrued for those contractors who have still to get up to date.
 
HMRC will shortly be launching a publicity campaign to make contractors aware of what is coming. Here is a reminder of what you need to do:-
 
  • submit returns for all months back to the start of the scheme in April and
  • send in nil returns where appropriate for those months.
 
You can of course file a nil return simply by ringing the CIS Helpline. If they are not making regular payments to subcontractors for a while, contractors can ask to be recorded as ‘inactive’ and HMRC then will not send you a return for up to six months.
 

How much is the penalty?

 
The automatic, interim, penalty of £100 will be issued for each return that HMRC have not received by 19 October 2007. Further automatic penalties will be issued for each subsequent month until the return is received.

Further penalty notices may be issued to contractors with more than 50 subcontractors when the returns are eventually submitted to HMRC.

 
If you would like help with completing the returns please do get in touch.
 
Internet links: HMRC guidance on penalties and HMRC on CIS

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CIS monthly return penalties - the end of the amnesty is nigh!
CIS monthly return penalties - the end of the amnesty is nigh! Any returns which are still outstanding on or after 20th October 2007 will attract a penalty right back to when it should have been filed.
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