As has been expected for sometime penalties charged for late CIS monthly returns are to change. The new penalties will apply for returns due for the month ended 5 November 2011.
HMRC believe that for many contractors (especially new contractors) penalties will be less under the new regime than the current regime. As a result although the new rules don’t come in until October, if you have been, or are, charged penalties for filing late before October 2011 you can ask HMRC to calculate the penalties under the new rules and if it is less than under the current rules you can ask for the penalties to be reduced.
Under the new penalty regime, penalties will be charged as follows:
Initial failure to meet due date
If a return is not received by HMRC by its due date of the 19th of the month, a penalty of £100 will be charged.
Return still outstanding two months after due date
If the return has still not been received by HMRC two months after its due date, an additional penalty of £200 will be charged.
Return still outstanding six months after due date
If the return is still outstanding six months after its due date, a 'tax-geared' penalty becomes due. This penalty is the greater of 5% of any deductions shown on the return or £300.
Return still outstanding twelve months after due date
If the return is still outstanding twelve months after its due date, a second 'tax geared' penalty becomes due which could be as much as 100% of any deductions shown on the return or £3,000.
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. The limit only applies to contractors new to CIS that have not sent in their first returns on time. It does not apply to contractors that have already filed returns previously.
How we can help
If you would like help completing your CIS returns or have other questions about the CIS and its application please speak to Mark Tibbert on 01242 237661 or email him at firstname.lastname@example.org.