My company registered for CIS last summer. It does not have any employees so did not have an existing PAYE scheme. When registering as a CIS contractor I was told that although we would receive a PAYE employer's reference etc we did not need to submit monthly payroll returns, only monthly CIS returns.
In the second month the CIS deductions we suffered on our income exceeded the CIS deductions we had made from our subcontractors. I found CIS 132 (online) which explained the rules for set off in this situation, so submitted our monthly CIS return relating to our subcontractor deductions but did not make any payment. We did this for the next 4 months before getting a call from HMRC chasing payment of 5 months worth of CIS deductions.
They told me that we should have been submitting monthly EPS returns. I was mortified as I really had tried to do everything by the book. None of the CIS guidance I read referred to monthly payroll returns and right at the beginning the CIS helpline also told me we didn't need to do them as we didn't have any employees. I even had to ring HMRC to get the set up of our PAYE scheme amended so that I could register for PAYE online & submit the required returns.
Our account remains in credit as in each month we have suffered more deductions from our income than we have made from our payments BUT HMRC have charged interest on the 5 "late" payments. They told me on the phone that "100% - any appeal against the interest would be unsuccessful so it would be a waste of time". My question is - is it worth appealing or would it be a waste of time?