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HMRC internal manual

Compliance Handbook

Penalties for Failure to Pay on Time: Rules for specific taxes: Construction Industry Scheme (CIS): Penalties: Amounts payable under a determination or as a result of the amendment or correction of a Return

We may make a determination under Regulation 13 IT (Construction Industry Scheme) Regulations 2005 where

  • there is a dispute between a contractor and sub-contractor as to

    • whether a deduction on account of tax should be made, or
    • the amount of the deduction on account of tax, or
  • we have reason to believe that there may be an amount payable for a tax year which has not been paid.

A contractor may amend or correct their return if it comes to their notice that it contains an inaccuracy.

A penalty is payable where an amount due under such a determination, amendment or correction is paid late.

The penalty date is 31 days after the date on which the determination, amendment or correction is made. This means that the contractor is liable to an initial penalty of 5% of the amount unpaid at the penalty date.

The employer may also be liable to further penalties based on 5% of any amount unpaid 5 months or 11 months after the penalty date.

Note that if an amendment or correction is made to a return this may indicate that the original return was incorrect and that an inaccuracy penalty may be chargeable under Schedule 24 FA07.