Contractors will now incur steep fines for failure to submit returns on time.
The new Construction Industry Scheme (CIS), introduced on 6 April 2007, brought with it a hard-hitting penalty regime, including penalties for late submission of contractors’ monthly returns.
As of 20 October 2007, HMRC will issue an automatic interim penalty of £100 for each monthly return due between 6 April and 5 October 2007 that is not submitted on or before 19 October, and again on the 20th of each month thereafter until the return is submitted.
Returns showing payments to more than 50 subcontractors will be subject to a further penalty of £100 for each additional 50, or part thereof. Returns for the tax months ending after October 2007 will be treated as late if they miss the normal 14-day deadline.
In addition, contractors who are also subcontractors need to be aware that if one return is submitted more than 28 days late, or more than three late returns are made in any 12-month period, they will lose their gross payment status. The late payment of tax withheld under CIS or Pay As You Earn could also lead to loss of gross payment status if there are too many short delays, or one delay of more than 14 days.
Contractors need to examine the details of the new scheme carefully to ensure that they are recording and reporting the necessary information correctly and on a timely basis.
Businesses that are unsure of what is required should seek advice on record keeping and their obligations before it is too late.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
