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HMRC internal manual

Construction Industry Scheme Reform Manual

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HM Revenue & Customs
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Late Return Automatic Penalties: Scheme changes and the issue of penalties

CISR65600 Action Guide contents
   

Following the introduction of FA09/SCH55 CIS penalties from 29th October 2011, where a scheme succession, merger or transfer takes place on or after this date, the CIS system will only issue penalties going back as far as the return for the month ended 5th November 2011 (where this is required), as no further new or increased CIS penalties under TMA70/S98A will be issued automatically after 28th October 2011.

Merger of scheme

Where the CIS record shows that a contractor scheme has been merged into another scheme, CIS will identify any returns that are late for penalty periods up to, and including the period in which the date of the merger falls. This will apply where an automatic late return penalty has not already been created for this period.

Any penalties arising for penalty dates prior to the date of merger for the ‘merged from’ scheme will be created using this scheme’s (the merged from scheme) AO reference. Any amendments or reissuing of penalties created against this scheme will also be raised against the same scheme’s reference number.

Penalties arising for periods after the date of merger will be created in the name and AO reference of the ‘merged to’ scheme.

Any capping period already set on the ‘Merged to’ scheme will be unaffected by the merger of a scheme into it from the ‘Merged from’ scheme.

Succession of scheme

Where the CIS record shows that a contractor scheme has been succeeded by another scheme, the system will identify any returns that are late for penalty dates up to, and including the period in which the date of the succession falls. This will apply where an automatic late return penalty has not already been created for this period.

CIS will continue to create penalties for subsequent months that the identified return remains late or outstanding. Any penalties arising for periods prior to the date of succession for the ‘succeeded from’ scheme will be created using this scheme’s AO reference. Any amendments or reissuing of penalties created against this scheme will also be raised against this scheme’s reference number.

Penalties arising for periods after the date of succession will be created in the name and AO reference of the ‘succeeded to’ contractor scheme.

Where the succession occurs during the monthly return period, returns will be expected from both the ‘succeeded from’ and the ‘succeeded to’ schemes.

Transfer of scheme

Where the CIS record shows that a contractor scheme has been transferred to another scheme, the system will identify any returns that are late for periods both before and after the date of transfer. This will apply where an automatic late return penalty has not previously been created for this penalty date.

Any new penalties created for penalty dates after the date of transfer will be raised against the new AO reference. This will also refer to the issue of any new penalties raised for penalty dates relating to return periods prior to the date of transfer. However any amendments or re-issuing of penalties originally issued from the old AO reference will also be raised against the old reference number.

Cessation of scheme

Where the CIS system is informed that a contractor scheme has ceased, the system will only identify returns that are outstanding for periods up to and including the period in which the date of cessation occurred. This will apply where an automatic late return penalty has not already been created for this penalty date.

The system will continue to create penalties for subsequent months for which the identified return remains outstanding or is received late. Any amendments or re-issuing of penalties for periods prior to the date the cessation occurred will be created using the ceased contractor scheme reference.

For actions to take where there are outstanding monthly returns for a contractor scheme that has now ceased, see the following action guides;

Company contractor schemes - CISR65690

Individual and Partnership contractor schemes - CISR65700