If any of your Construction Industry (CIS) returns are filed one day late, HMRC will charge an initial fixed penalty of £100.
Additionally, if they have still not received that return:
- two months after the date it was due, they will charge a second fixed penalty of £200
- six months after the date it was due, they will charge a further penalty of £300 or 5% of any liability to make payments, that should have been shown in the return
- 12 months after the date it was due, they will charge a second further penalty. The amount of this penalty will depend on why your return was late. The amount charged will be either £300 or 5% of any liability to make payments, or a ‘higher’ penalty of up to 100% of any liability to make payments, or a minimum penalty of £1,500 or £3,000.
There are also occasions when HMRC will consider a reasonable excuse for not filing a CIS return, and if they accept your reason for the late filing then penalties will not be applied.
HMRC will not normally accept that lack of funds to pay (unless due to circumstances outside your control) or reliance on someone else to file your returns, as a reasonable excuse.
To further complicate matters there are circumstances when penalties may be capped at a lower amount.
Obviously, the best way to avoid penalties is to file your CIS returns on time. If you are presented with a bill for penalties it is well worth getting your tax advisor to check it out for you, and if necessary, appeal.