As a small business owner, you will have to deal with a number of different departments within HMRC. Each department has different forms to complete with different deadlines and different penalties should either your submission or payment be late. The following is a quick guide as to what you need to be aware of when dealing with HMRC and which deadlines you should put in your diary.
This article summarises the main tax CIS late filing and payment penalties. In addition, you should be aware there are penalties for providing incorrect information.
CIS Late Filing
If you operate in the construction industry you must file a return to report the deductions you have made from your subcontractors on a monthly basis. The period runs from the 6th of the month to the 5th of the following month and you have 14 days to make the return. For example, for the period from the 6th of May to the 5th of June, you must file the return by the 19th of June. It is still possible to file paper versions of the form, but as with most HMRC forms they can also be filed electronically and it is likely that this will be mandatory in the future.
The payment of the CIS deductions are made at the same time as your PAYE payments and have the same deadlines as described above.
You must make a return every month even when no deduction has been made: if no deductions have been made then you must file a nil return. The penalties for failing to file the monthly return are severe and are as follows:
- 1 day late: Fixed penalty of £100 (even if you are making a nil return)
- 2 months late: Fixed penalty of £200 (again, this also applies to nil returns)
- 6 months late: £500 or 5% of the CIS due, whichever is higher.
- 12 months late: £300 or 5% of the CIS due.
These penalties are cumulative, so if you are 12 months late the penalty is a minimum of £1,100. The maximum penalty is capped at £3,000.
Penalty charges may be issued for missed payments of C.I.S.
- Missing one payment in a tax year there is no penalty, as long as the payment is less than six months late.
- Missing two to four payments, a 1% penalty is issued (of the PAYE due).
- Missing five to seven payments, the penalty is 2%.
- Missing eight to ten payments, the penalty is 3%.
- Missing eleven or more payments, penalties of 4% apply.
CIS is paid at the same time as PAYE and follows the same payment pattern. The same penalty and interest regime apply as outlined above.
Here at ACCOTAX – Surrey Accountants, we cater to all sorts of clients from the Constructions industry scheme, whether you are working as a contractor or subcontractor we have extensive experience of dealing with CIS contractors. If you are looking for the best C.I.S accountants feel free to contact us.