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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: Contractor appeals and claims that the CIS monthly return was received late because of postal delay

CISR65600 Action Guide contents
   

Where an appeal is made against a CIS penalty on the grounds of postal delay and the contractor maintains that the return was posted in good time and should have reached HMRC by the 19th of the month, you should take into consideration the following;

  1. was there any postal industrial action, either in the location of where the CIS monthly return was posted, or in the area of the RDC processing centre at Netherton (Liverpool) at the time the CIS monthly return in question was claimed to be in the post?
  2. was there severe weather which may have disrupted postal services either in the location of where the CIS monthly return was posted, or in the area of the RDC processing centre Netherton (Liverpool) at the time the CIS monthly return in question was claimed to be in the post?
  3. did the contractor post the return back to HMRC using the ‘large letter’ postal rate?

Where there is evidence that either a) or b) above was likely to have delayed the CIS monthly return for which a penalty has been issued and the ‘large letter’ rate was used for posting the return back to HMRC, you may uphold the appeal against the CIS penalty in favour of the contractor and it may be reduced to nil.

Contractor makes an appeal on the grounds of postal delay for the first time

Where there is no evidence of either a), b) or c) above, but the contractor still insists that the CIS monthly return was posted in good time, unless there is evidence to the contrary, you should accept the grounds of the first such appeal without further enquiry. You should uphold the appeal in favour of the contractor and the CIS penalty should be reduced to nil. You should also issue an education letter to the contractor reminding them that the large letter postal rate needs to be used for sending CIS monthly returns to HMRC.

Contractor makes an appeal on the grounds of postal delay for a second or subsequent occasion

Where the contractor makes an appeal on these grounds for the second or subsequent occasion within a twelve month period, you should ask the contractor to provide some form of evidence to back up the date of posting as claimed. A certificate of posting or special delivery receipt should be sufficient.

If the evidence to back up the contractor’s claim is not available, the appeal should be rejected and upheld in favour of HMRC.

Contractor makes an appeal on the grounds of postal delay for a second or subsequent occasion, but following a period of 12 months (or more) where the contractor’s returns have been made on time.

Where there is no evidence of either a) or b) above, but the contractor still insists that the CIS monthly return was posted in good time and CIS monthly returns sent through the post have been received on time for a consecutive period of 12 months or more immediately before the month under appeal, unless there is evidence to the contrary, you should accept the grounds of this appeal without further enquiry.

You should uphold the appeal in favour of the contractor and the CIS penalty may be reduced to nil. You should also issue an education letter to the contractor reminding them that the large letter postal rate needs to be used for sending CIS monthly returns to HMRC.

Note: Where a CIS penalty appeal is to be taken before a First-tier Tribunal hearing on the grounds of postal delay, it is essential that the HMRC statement of case sets out the robust processes in place at RDC Netherton for the handling of CIS monthly returns. Guidance on this process can be found in the chapter at CISR68600.