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If you're a contractor under the Construction Industry Scheme (CIS) you'll need to send HM Revenue & Customs (HMRC) a return each month. Your monthly returns tell them about any payments you've made to your subcontractors during the last tax month.
HMRC will expect you to send your returns in to them on time every month to help them run the scheme efficiently. It's important to beat the deadline to avoid getting an automatic penalty.
This guide explains what will happen if you send a return in late.
You'll also find this information helpful if you're an agent who handles CIS returns for your clients.
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HMRC expect you to get each monthly return to them no later than 14 days after the end of the tax month it's for. A tax month runs from the sixth day of one month to the fifth day of the following month. So in practice, it means you'll need to get your returns to HMRC by the 19th of each calendar month.
For example, if your return was for the tax month from 6 May to 5 June, you'd need to get it to HMRC no later than 14 days after 5 June. So the deadline for that return would be 19 June.
Even if you didn't pay any subcontractors during the last tax month, you'll normally still need to make a 'nil return' to tell HMRC. The same deadline applies to nil returns.
Read about making monthly contractor returns under the CIS
If you make your returns by post, be sure to send them in good time to allow for any postal delays. Always make sure you sign the return. If you don't, HMRC will send it back for you to sign. But they can't give you any extra time to return it to them.
Submitting your returns electronically can help you to beat the deadline. You can make your return 24 hours a day, seven days a week. In most cases, it should get to HMRC almost instantly, however, in busy periods such as around the 19th of the month there might be a delay. Exceptionally, in a small number of cases, it could take up to 24 hours for your return to be acknowledged. If this happens, please don’t keep trying to resend the return as this can cause multiple returns for the same period.
There are several different ways of making your monthly returns electronically, including HMRC's CIS Online service. It's free to use, but you'll need to register before you can use it.
However you make your returns, you should always get them to HMRC on time. So even if there's something on a return that you're still discussing with them, send it in anyway.
Find out how to use HMRC's CIS Online service
If you send HMRC a monthly return late - whatever the reason - you'll automatically get a penalty.
The basic penalty for a late return with 50 or fewer subcontractors on it is £100.
If the return has more than 50 subcontractors on it then the penalty goes up by another £100 for each additional block of up to 50 subcontractors on the return.
Number of subcontractors on the return |
Automatic penalty for a late return (including 'nil' returns) |
Additional penalty for each extra month late (continues up to 12 months) |
Extra final penalty where a return is over 12 months late |
|---|---|---|---|
0 - 50 |
£100 |
£100 |
£3,000 |
51 - 100 |
£200 |
£200 |
£3,000 |
101 - 150 |
£300 |
£300 |
£3,000 |
151 - 200 |
£400 |
£400 |
£3,000 |
The penalty keeps increasing with the number of subcontractors on the return. So if there were 500 subcontractors, for example, the late return penalty would be £1,000 - and so on.
Returns with no subcontractors on them - nil returns - also get a £100 penalty if they're late.
HMRC charge these penalties for each month a return's late. So if a return with 50 subcontractors on it was two months late, for example, then the total penalty would be £200. If HMRC still hadn't received it after three months this would go up to £300 - and so on for up to 12 months.
If HMRC still haven't had a return after 12 months they add an extra final penalty charge of an amount up to £3,000.
If HMRC charge you a penalty they will give you a penalty notice. You've got the right to appeal against any penalty notice. This must be done in writing to:
HM Revenue & Customs
CIS Penalty Appeal
Custom House
Carnbane Way
Carnbane Industrial Estate
Newry
BT35 6QG
You'll find more information about how to appeal against a late return penalty on the penalty notice they sent you.
Mistakes do happen and it may be that HMRC agree with the reason why you're appealing. If they do, they may drop the penalty.
More about appeals and other options if you disagree with HMRC's decision
Sometimes HMRC may change a penalty amount because you've amended a late return.
For example, you might have sent them a late return with 51 subcontractors on it. Because there were more than 50 subcontractors, they would have charged you the basic £100 penalty plus an extra £100 - £200 altogether. If you later realised you'd included two subcontractors by mistake you'd need to tell HMRC about the error so they could update your return. Because the amendment reduced the number of subcontractors below 50, you should write to HMRC and ask them to reduce the penalty to £100.
This can work both ways. If your original late return showed 49 subcontractors but you later updated it to 52, for example, they would have to increase your penalty.
If you've got any questions about a penalty notice, or you want advice on managing your returns, you can call our HMRC's CIS Helpline.
Find out about your obligations and responsibilities as a CIS contractor
Register for the CIS Online service
Obtain CIS340 'Construction Industry Scheme - guide for contractors and subcontractors' (PDF 267K)
