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HMRC internal manual

Construction Industry Scheme Reform Manual

From
HM Revenue & Customs
Updated
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Late Return Automatic Penalties: Company Contractor has ceased to trade and has outstanding monthly returns

CISR65000 Information contents
   

 

Where a company contractor has ceased trading and there are missing contractor monthly returns, NICEO should take the following action:

  • Ascertain who the Directors of the Limited Company were, you may be able to ascertain this information from EBS. To do this;
  • In EBS select ‘Amend Employer Summary’ and then ‘OK’
  • At the next window enter the employer reference for the company and then ‘OK’
  • Select ‘View’ from the titlebar at the top of this window and then ‘Limited Company / Director Details.
  • The Directors name and National Insurance number (NINO) may now be displayed, now use the tracing facility within TBS using the NINO to ascertain the Directors personal address.
  • Write to the one of the Directors who had control of the company along the following lines:

Our records show that the company was a contractor within the Construction Industry Scheme until it ceased on DD/MM/YY.

I would normally have expected the company to make monthly contractor returns (CIS300) for the periods ended 05/MM/YY to 05/MM/YY but these have not been received. As a responsible officer of the former company I am therefore asking for your help.

Would you please advise me of the date the company last paid a subcontractor and, if appropriate, submit all outstanding returns either on line or to the following address………… for processing.

It is extremely important that you do this, as without this information any subcontractors that the company engaged may not be given credit for the CIS deductions made, which will either affect the amount they can set against their Self Assessment liability or, in the case of a limited company, any PAYE/NIC deductions due.

If the company had employees that were subject to PAYE/NIC, unless the Employer Returns are completed any employees may not receive credit for Tax and NICs deducted from their wages which could restrict any benefits due to them or, in certain cases even restrict their pension.

To assist you, I enclose an attachment/tear off slip and you can either phone the contact centre (telephone number above) with this information or, if preferred, send the completed slip back to this office. Thank you for your help in this matter.

Action at the Contact centre

If the Director responds to the contact centre, they will take the following action;

  • vacate any penalties for the returns due after the cessation date where no payments were made
  • send a WAM to the CIS Centre at Newry advising them of the date the last payment was made to a subcontractor.

Action at NIC & EO, Longbenton

If, however, the Director responds in writing directly to NICEO, or they have the WAM referral from the Contact Centre, the staff at NICEO will carry out the following actions;

  • vacate any penalties for the returns due after the cessation date where no payments were made (if not already done)
  • set return exemptions for those returns due after the cessation date where no payments were made up until the date the contractor record was closed on CIS
  • set penalty inhibitions for any future penalties to be issued in respect of returns due before the cessation date.
  • set penalty inhibitions for any future penalties in respect of returns due after the cessation date where no payments were made up until the date the contractor record was closed on CIS
  • take action to ensure that the EBS record is closed where that has already not been done

Note: where the contractor scheme is closed on EBS and the cessation date falls into a previous tax year, you will not be able set return exemptions for the tax year(s) following the year of cessation. Instead, in these limited circumstances only you may capture a nil return for each month from the 6th April following the year of cessation to the month the scheme was actually closed on EBS. When doing so please make the following note using ‘Record Contact’;

  • ‘‘Pro forma nil returns captured MM/YY to MM/YY inclusive following a request by DMB as contractor ceased DD/MM/YY - PID1234567”

The Director does not respond

If you receive no response to your letter to the Director and you have a firm cessation date for the company, or where you have no cessation date, but you do know the date the company was ‘struck off’, NICEO should;

  • vacate any penalties for the returns due after the cessation/striking off date
  • set return exemptions for those returns due after the cessation date up until the date the contractor record was closed on CIS.
  • set penalty inhibitions for any future penalties to be issued in respect of returns due before the cessation/striking off date.
  • set penalty inhibitions for any future penalties in respect of returns due after the cessation/striking off date up until the date the contractor record was closed on CIS
  • take action to ensure that the EBS record is closed where that has already not been done

Taking this action will ensure that the End of Year figure will then balance, and will avoid the issue and later vacating of unnecessary penalties.

Where the company has now become insolvent you may still carry out the procedure outlined above, but be aware that the company records may now be held by the Insolvency practitioner, who is under no obligation to complete any outstanding monthly returns on behalf of the company.