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HMRC internal manual

Compliance Handbook

Penalties for Failure to Pay on Time: Rules for specific taxes: Construction Industry Scheme (CIS): overview

The new penalty regime for the Construction Industry Scheme (CIS) starts on 6 April 2010 and applies to the failure of a person to make accurate payments that are due under CIS on time.

A person who makes certain payments under construction contracts is required to make deductions on account of tax from the payments and to pay these amounts by the due date.

The due date is

  • 17 days after the end of the relevant tax period if payment is made electronically, or
  • 14 days after the end of the relevant tax period if payment is made by any other method.

Penalties are charged in relation to tax years and commence on the penalty date. The penalty date is the day after the due date.

A person is treated as having paid the full amount of tax on time if the difference between the amount paid by the due date and the tax due is £100 or less. This person would not be liable to a penalty for failing to pay on time.

The penalty regime is progressive, which means that continuing failures can give rise to an increased penalty.

In relation to CIS the penalty regime covers liabilities that arise from the following.

  • Failure to pay part or all of the amounts due, see CH153200.
  • Amounts payable under a determination or as a result of the amendment or correction of a return, see CH153450.