Published on Tuesday, 20 September 2011 00:00
Tradesmen, particularly plumbers, have, as reported elsewhere in this issue of The Concerto, been the focus of attention for our friends at HMRC. However, the industry as a whole need to be aware of changes to the Construction Industry Scheme (CIS) taking effect next month. October.For those of you not familiar with the Construction Industry Scheme, HMRC describe it as “a set of special rules for handling payments made by contractors to subcontractors for construction work. If your business works in the construction industry or does construction related work then it may need to register with HM Revenue & Customs (HMRC) as either a contractor or a subcontractor under CIS.”
The CIS requires contractors to submit a return for each month by the 19th day of the following month. The changes relate to....
the penalties for late submission of CIS returns which, not surprisingly, are increasing. These imposed penalties can quickly amount to a significant sum and include a tax geared penalty on the amount of deductions shown on the return. An important point to note, these penalties apply to each return due.
- Immediately a return is late, a fixed penalty of £100 is applied.
- Two months after the filing date, a second fixed penalty of £200 is added
- Six months after the filing date, a tax geared penalty which is the greater of £300 or 5% of the amount of deductions shown on the return. (Presumably this 5% will be calculated on historical returns)
- Twelve months after the filing date a second tax geared penalty which is the greater of £300 or 5% of the amount of deductions shown on the return. If HMRC believe that information has been deliberately withheld, greater penalties may be applied.
HMRC have decided to apply a limit to the fixed penalties for new contractors so that the £100 and £200 penalties do not exceed a maximum of £3000. No tax geared penalties will be applied during this period, however once returns are made the penalties will be adjusted to include a 5% of the amount of deductions shown, if appropriate.
It is really important to tell HMRC if you cease trading or do not pay subcontractors in a particular period, if you don’t tell them they may impose a late penalty of £100.
For further information visit www.hmrc.gov.uk/cis/cis-whatsnew.htm If you are unsure of your obligations under CIS you can call our friendly team on (01635) 884270 or email info@opusaccounting.co.uk and we will come back to you.
