Subscribe to our monthly e-newsletter.

• 
• 
• 

Construction Industry - Penalties after 1 April 2007

February 2006

In advance of the changes to the CIS rules we have noted below a quick summary of the penalties which will be applied, post 1 April 2007, if you don't comply with the new rules.

We will be issuing more information on the amended Construction Industry Scheme prior to implementation on the 1 April 2007.

1. Late submission of monthly return. The penalty for this including a failure to submit a nil return (unless otherwise agreed with the Revenue) is £100 per 50 subcontractors or part thereof per month.
2. Negligent or Fraudulent Submission of an Incorrect Monthly Return. Penalty here is up to 100% of the under-declared CIS deductions.
3. Failure to Produce CIS Records. Where HMRC require the production of CIS records and the contractor fails to do so the penalty is an initial penalty of up to £300 and a daily penalty of up to £60 for a continuing failure.
4. Failure to Provide Subcontractor with Payment Advice. The penalty for this easily made error is an initial penalty of up to £300 and a daily penalty of up to £60 for a continuing failure.
5. Making a False Statement in order to register for Gross Payment. A penalty of up to £3,000 (can be mitigated).
6. Making an Incorrect Status Declaration. This is the big one carrying a penalty of up to £3,000 per month (as it is a monthly failure).

Additionally contractors will be at serious risk of losing their gross payment status, due to a new review process. Presently contractors will only lose their gross payment status, if they fail to abide by the relevant criteria at a three year review date. Under the new rules this review will be triggered on a "rolling basis".

For instance gross payment status could be taken away if you were just 14 days late in making a monthly payment, or, make 4 late payments however short the duration.

Setting up workable systems to monitor compliance under the new regulations will pay dividends. If you are a contractor and would like to set up a planning meeting with us please do call.