New penalties apply from 6 October in respect of returns files late. The first return to be affected will be that for the month ended 5th November 2011
A contractor making contract payments under the construction industry scheme must make a monthly return together with any necessary payment to HMRC not later than the 19th each month.
Penalties will be charged as follows:
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Initial failure to meet due date of the 19th of the month - a penalty of £100.
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Return still outstanding two months after due date - a further penalty of £200
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Return still outstanding six months after due date - a ‘tax-geared’ penalty becomes due which is the greater of 5% of any deductions shown on the outstanding return, or £300.
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Return still outstanding twelve months after due date - a second ‘tax geared’ penalty becomes due.
Contractors new to CIS
Under the new rules, if you have not sent any previous returns and are filing your first returns late, there will be an upper limit of £3,000 on the total fixed penalties (£100 and £200) that may accrue.
This upper limit does not apply to any ‘tax-geared’ penalty except that, where it applies, it removes the £300 minimum penalty that would otherwise be charged where the tax-geared penalty is less than £300.