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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: CIS: the IDMS automatic process: introduction

Overview

Initial action

IDMS receives details of:

  • outstanding and late submitted returns from CIS
  • outstanding CIS return charges and specified charges liabilities monthly from ETMP

  • outstanding penalties monthly from ETMP.

When the work items are received, IDMS:

  • out-sorts work items containing signals that are not appropriate for automatic action for clerical review using existing rules and
  • handles the cases in accordance with existing guidance.

CIS returns

Although there have been changes to CIS penalties, which can be seen below, the CIS return process has not changed.

CIS returns submitted by PAYE only (P scheme) employer

ETMP accepts CIS return details from CISR and creates a CIS return charge irrespective of the scheme type. This means that you may see a CIS return charge on ETMP even though the employer has been set up as a ‘P’ scheme.

When this occurs, a work item is created on the ‘exceptions’ worklist. The PT Operations CIS team will review the employer’s circumstances and where appropriate change the scheme type from ‘P’ to ‘PSC’ or ‘XP’.

Schedule 55 CIS Penalties

Schedule 55 CIS penalties were introduced on the 10th October 2011. The first penalties under Schedule 55 were raised on 29th November 2011 for the return period 5th November 2011. Where the penalty has not been paid or stood-over a work item will be created on IDMS for the first time around the 29th December 2011.

There will be four work items on IDMS created to accommodate Schedule 55 CIS penalties.

  • CIS Fixed Penalty
  • CIS Tax Geared Penalty
  • CIS Fixed Penalty Interest
  • CIS Tax Geared Penalty Interest (will be displayed on the IDMS screen as CIS Tax Geared Pen Int.)

The CIS penalty regime has not changed but, from 2013-14, all new CIS penalties created are accounted for on the PAYE contract account on ETMP, rather than the Automated Miscellaneous Charges (AMC) contract account. However, any existing penalties on the AMC contract account will remain and will not migrate to the PAYE contract account.

Interest charges raised on CIS penalties will be created on the same contract account as the CIS penalty that gave rise to the interest charge. For returns due on or after 19 June 2015, penalties can be appealed online using the Penalty Appeals Service (PAS). From April 2015 (when the obligation to file a nil return was removed), upon receipt of a nil return or notification that no return is due is received, any penalty for late filing will be cancelled. See DMBM519515 regarding penalty appeals.

Linking rules

Where there are no existing open CIS penalty work items a first reminder letter will be issued. Once the reminder letter has been issued the work item will follow the relevant collection strategy.

Where there are existing open CIS penalty work items any new work items will link together and follow the relevant collection strategy in place at the time.

Section 98A CIS penalties

Section 98A penalties were raised between October 2007 and October 2011 where the CIS return was submitted late or not submitted all.

The last automatic Section 98A penalty was issued on October 29 2011 for missing or late submitted returns for return periods 5 October 2011 and earlier. The last Section 98A CIS penalty will be sent to IDMS on or around 29 November 2011.

No further new automatic Section 98A penalties will be issued after 29 October 2011.

Amendments to penalties already raised will continue to be issued, where necessary, but not where the amendment will increase the penalty charge.

All Section 98A CIS penalties that have already been issued will remain due and payable until they are paid in full or an appeal has been received and accepted and should be pursued following current guidelines.