CIS late filing penalties for new business who had never even heard of CIS

I was recently appointed agent for a company set up in late 2010 which is involved in the installation of air conditioning systems.  When we first met, i mentioned CIS, and the business owned had never even heard of it.  Despite working in this field for many years, his history prior to going out on his own was as an employee involved in the engineering rather than admin side, hence he had never heard of CIS.  By the time I was engaged and persuaded him that CIS applied, he had already missed 5 months of returns, which I then submitted for him shortly after my appointment.  He has now had the standard late filing penalties issued, totalling £1,500 - on what grounds can I appeal?  Ignorance of the law is no defence, but he had genuinely never even heard of CIS.  I am new to CIS myself so no experience of appeals.  Thanks

Comments

Just be honest

JuliaKing | | Permalink

I have recently taken on a new client, similar problem, but he contacted me on the basis he had just discovered through a friend he should have registered for CIS. He had previously always been employed and only set up in business in June 2010. As he had never been self-employed before he was not aware or even heard of CIS.

I believe if you just state the situration as it is to HMRC and just be honest, my clients penalties are totally disproportionate, they all added up to £7,800 & HMRC are not out of pocket as the subbies he paid without deducting tax will still be paying over the tax when they deal with their self assessment.

There are some useful comments on a previous posting, type in 'CIS penalties gone mad' & the 2nd & 3rd comment are very useful.

I haven't had a response back from HMRC yet, but they are never very quick to respond.

 

Main contractors

talkinpeace | | Permalink

surely the main contractors who paid him gross are also partly at fault?

Jamie Roberts's picture

'CIS penalties gone mad' & the 2nd & 3rd comment are very useful

Jamie Roberts | | Permalink

trying to locate this, can you point me in the right direction?  Cheers 

Not much help I'm afraid

JuliaKing | | Permalink

At the time of the posting I tried to attach the link, but was unable to do so, but I could find it when I typed in, 'CIS penalties gone mad'. However, I cannot find the thread any more, I think it must be down to the fact that AWeb have changed their webiste. I have tried all sorts of scenario's to find it but unfortunately I can't, Which is quite frustrating as one of the comments was quoting all sort of regulations you could use, that I was going to try if my honest plea didn't work.

I still have yet to hear from HMRC regarding my client, but I find appeals always take forever.I am sorry I can't help you further.

my client is the contractor rather than sub-contractor

katebaxter | | Permalink

my client is the contractor rather than sub-contractor, but when we did 6 CIS returns late he paid all the CIS tax which he should have deducted himself, at his own cost.  He has ongoing relationship with the sub-contractors so hopefully can recoup this over time.

abelljms's picture

late sis

abelljms | | Permalink

 

 

you have not clarified - were the 5 late returns £0, or with figures -did the returns have cis deducted from subbies on?

 

late returns should be £100 a time = £500.

 

the others are certainly right about appealing in writing, and seeing what happens. once you appeal you get a real person to correspond with and argue your case.

 

 

the other comment about paying gross and the subbies paying their SA is EXACTLY y cis came in - HMRCy were fed up with NOT getting their dough so they transferred the tax liability to 'employers' to reduce their bad debts ! - so u r not really correct there that it makes no difference.

 

 

 

 

Late sis (I assume you mean CIS)

JuliaKing | | Permalink

late returns should be £100 a time = £500. 

Just to clarify, late returns are £100 a time, however if no return has been submitted for 5 months, you receive £100 for month 1, then after month 2, you receive £100 fine for month 2 plus £200 fro month 1 as it has now been late for 2 months and so on. So after 5 months you receive £500 + £400 +£300 + £200 + £100 = £1500. 

the other comment about paying gross and the subbies paying their SA is EXACTLY y cis came in - HMRCy were fed up with NOT getting their dough so they transferred the tax liability to 'employers' to reduce their bad debts ! - so u r not really correct there that it makes no difference. 

I agree this is the reason CIS came in, my point in the letter wasn't that it was the correct way of dealing with it, I was making the point that whilst my client did not deduct tax from the subbie under the CIS scheme, HMRC would not be losing money as they would still get the deduction of tax when the subbie dealt with his SA as payment of tax would be paid over for the amount of income he/she had earnt.

Good news,, all penalties reduced to nil

katebaxter | | Permalink

Wrote to HMRC as suggested just stating facts that the client didn't know about CIS, but had complied as soon as they became aware of it.  Happily, HMRC accepted the letter without comment and all penalties were reduced to nil.

Nil Penalties

JuliaKing | | Permalink

Good! It's really good when a straight forward letter yields the response you are looking for & you have a happy client.

Very encouraging

Kathrin Doelle | | Permalink

Indeed.

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