The whole CIS system is backed up by a series of significant penalties. These penalties cover situations in which an incorrect monthly return is sent in negligently or fraudulently. Or for failure to provide CIS records for HMRC to inspect and incorrect declarations about employment status. Penalties are triggered by late returns under the CIS scheme as follows:
- a basic penalty of £100 for failure to meet due date of the 19th of the following month
- where the failure continues after two months after the due date, a penalty of £200
- after six months, the penalty rises to the greater of 5% of the tax, or £300
- after 12 months, the penalty will again be the greater of £300, or 5% of the tax
- where information is withheld deliberately, the penalty is 70% of tax, or £1,500 if greater
- where the withholding of information is deliberate and concealed, it will be 100% of the tax, or £3,000 if greater
- where the return is 12 months late, but the information only relates to persons registered for gross payment (so no tax deduction was due). The penalty will be £1,500 for deliberate withholding without concealment, and the penalty will be £3,000 for deliberate and concealed withholding of information
- where a person has just entered the CIS scheme penalties will be restricted to a maximum of £3,000 in certain circumstances
If you need help with penalties, or for anything else in relation to CIS scheme, please contact us at Adiva Accountants in London and we will be happy to help you.