CIS penalties - Gulp!

CIS penalties - Gulp!

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My client has brought his post in to me this morning. Yes, 78 notices of penalties for non submission of 11 months of CIS300 monthly returns.
During the year no interim penalties received.

Background is that client, small business caught within CIS - t/o about £50k.

Domestic problems forced him to move from his house where monthly returns were sent. He tried 3 times to apply to file the monthy return online, but the password went to his old address and he was not able to act on it.
He wrote to HMRC to explain and request correspondence go to a different address. In the time that has elaped he didn't receive any paper returns. HMRC has waited a year use his new address and only to levy the penalties.
Oh, and during the year he didn't use subcontractors and so there was no tax to deduct or pay over.

Technically, he is in breach, but a breach brought about by his personal circumstances and made worse by HMRC who to me seem culpable. Anyone agree that a sudden £7,800 fine is completely over the top when no tax is owed?

Has anyone had a similar client experience they can share? Will HMRC 'see sense' on the basis that no tax is owed? I don't think the SATR rules of a penalty being limited to the tax owed apply here.

Andy Partridge

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By User deleted
15th Jun 2009 11:12

Not me - there must be more than one!
Never worked in or at Ashy de la Zouche (should that be Ashby!). Strictly Surrey.

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By skylarking
12th Jun 2009 17:59

Judith Webster
Do I know you? You didn't work at Ashby de la Zouch, did you?

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By jimeth
12th Jun 2009 15:12

Nil Returns by Phone
In case anyone is not aware - it is possible to file a Nil CIS300 return by telephone. So in this case the client who was unable to file either a paper return or an electronic return could have filed Nil returns by telephone to the CIS help line. It is also possible to advise HMRC that you are inactive for CIS purposes for a period of 6 months - there is a box on the paper return to do this or you can do it by phone or electronically. Be aware of this when advising clients who are registered for CIS but not currently paying any subcontractors.

I agree with others that if you persist you should be able to get these penalties cancelled - but it might be a slow process.

Jim Etherton
Senior Product Manager
Construction Industry Solutions Ltd
www.coins-global.com

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By User deleted
12th Jun 2009 14:15

Penalties
I have had recent experience of two cases where HMRC have failed to respond to advice about change of address and/or circumstances. In both cases (and on advice from a senior HMRC official that I happen to know socially) I have written to the Complaints Manager of the office concerned. In both cases that elicited a response and, with varying time scales, a resolution either in the clients favour or with no penalties being charged. The message seems to be to be proactive and complain as soon as there is a failure to get a response within a reasonable time frame rather than wait and hope the right action will be taken eventually.

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By User deleted
10th Jun 2009 21:45

Expect a wait
I have a client who erroneously got penalties for non submission of monthly returns for the month to 5/11/08 three months in a row.

Each time I wrote (first letter dated early December, then Jan then Feb when each penalty arrived) and told them that he wans't due to send one in as I had previously written and informed them that he was no longer using contractors (in fact he closed the whole PAYE scheme) as of 5/10 and that was the last return required.

I phoned up a couple of months ago and they acknowledge all is on their system, they received the appeals etc. Only three weeks ago did I get an acknowledgement of appeal regarding the letter from December!! It is so straightforward but they still can't sort it out.

Will they sort it out before I apply for the company to be dissolved?!?!

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By skylarking
10th Jun 2009 14:32

Thanks Rebecca
(and thanks again)

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
10th Jun 2009 13:34

Appeal straight away
You are correct in saying that there is no provision to remove the penalty when there is no tax due, but it is likely that your client has "reasonable excuse" for the failures, on the basis that he did try to sort the position out.

Marshall everything you have - dates names etc of contact and put in an appeal that he has a resonable excuse for the failure. Keep pushing - only a very small percentage of CIS penalties that have been issued are actually collected, so it is worth being persistent.

Good luck!

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