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HMRC internal manual

Compliance Handbook

Penalties for Failure to File on Time: Types of penalties for failure to file on time: CIS returns: Special provisions when new to CIS: Overview

This page only applies to the Construction Industry Scheme (CIS).

There are special provisions that apply where a person files their first CIS return. If, at that time, they have failed to make earlier returns there are limits on the penalties they incur. However, the special provisions do not apply to CIS returns that were due to be filed before November 2011, see CH62550.

Where a person files their first CIS return, and they had an obligation to file earlier returns, there is a maximum amount of total fixed penalties that they will be liable for on their failure to file that first return on time and the earlier returns. There are also adjustments to any penalties that the person becomes liable for at 6 or 12 months after the filing date.

Initial fixed penalty and second fixed penalty

For returns falling under the above special provisions, the total failure to file penalties for all those returns cannot exceed £3,000 for

  • the initial fixed penalty, see CH62340, and
  • the second fixed penalty, see CH62360.

Note that it is only the initial fixed penalty and second fixed penalty that are included in the £3,000 maximum. Any subsequent tax geared penalties, after 6 or 12 months, will still be incurred.

6 month further penalty

For returns falling under these rules, the 6 month further penalty, see CH62380, is simply 5% of any liability to make payments (CIS deductions) which would have been shown in the return in question. There is no minimum penalty of £300.

12 month further penalty

For returns falling under these rules, the 12 month further penalty, see CH62400+, depends on whether information was deliberately withheld.

If information was not deliberately withheld the 12 month further penalty is simply 5% of any liability to make payments (CIS deductions) which would have been shown in the return in question. There is no minimum penalty of £300.

The normal penalty rules apply, see CH62400+. Where information was

  • deliberately withheld but not concealed, the penalty is 70% of the liability to make payments (CIS deductions) that would have been shown in the return in question, or a minimum of £1,500, or
  • deliberately withheld and also concealed, the penalty is 100% of the liability to make payments (CIS deductions) that would have been shown in the return in question, or a minimum of £3,000.

FA09/SCH55/PARA13