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Reporting CIS monthly or catching up

Reporting CIS monthly or catching up

I have a client who was fairly bad with paperwork and keeping track of subcontractors payments (surprise surprise) he has since got to grips with it all and now reports it weekly to me.

I got bulk figures from him last month for the whole year to date so i reported it in the 5th March CIS return rather than seperate it out

HMRC have called saying they want the figures seperated into months so they can apply penalties. As he is always in credit with HMRC with CIS tax deducted he never actually had to pay money to them each month for the subbies tax theres no actual loss to HMRC apart from the info being late but still within the tax year in question

can they insist this is seperated? i always thought that as long as it was caught up by 5th April and all tax paid by 19th April then theres no harm done

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08th Mar 2016 09:42

Not with CIS....

I always thought that CIS penalties were £100 per month and cumulative, so worst case scenario £6,600.

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By pacta
08th Mar 2016 10:02

Worse

I think the regulations stipulate first a penalty of £100 and then subsequently a further £200 for each return period. The penalties are for late returns, not for late payment. Unfortunately they still stand. 

Quite a heavy handed regime!

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By rossmcv
08th Mar 2016 10:07

Hi, i know about the penalty charges etc but im just wondering is there any case for a penalty and being asked to seperate out the months? theres nothing on the website that tells you to do this and errors can be caught up in subsequent months so im wondering if they actually have a case to answer?

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By pacta
08th Mar 2016 10:35

Well

To answer a question with a question, were returns due for prior months? It seems from the information provided that yes they were. Therefore the penalties for those late returns will stand. 

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By rossmcv
08th Mar 2016 10:44

CIS

pacta wrote:

To answer a question with a question, were returns due for prior months? It seems from the information provided that yes they were. Therefore the penalties for those late returns will stand. 

 

Yeah, im probably onto a non starter with this. my thinking was no loss to the crown etc nothing due and all caught up but probably just have to accept this one as a lost cause

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08th Mar 2016 10:55

Nil return

Hi

I've got a client just like that, when he doesn't give me anything by 18th on month, I just assume it's a nil return and file one of those. Therefore returns might not be 100% correct but they aren't late :) Any payments missed are put on a later return so there's no loss to HMRC.

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By rossmcv
08th Mar 2016 11:38

CIS

Chris Ash wrote:

Hi

I've got a client just like that, when he doesn't give me anything by 18th on month, I just assume it's a nil return and file one of those.

 

this is pretty much exactly what i have to resort to with some and never thought much of it as, again, its all caught up

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08th Mar 2016 12:11

Ouch - never assume -

If you assume you make an ASS[***] out of U and ME. I wouldn't be at all happy ticking the box on the return without confirmation from the client first. I send CIS contractors an email on 7/8 of the month, and if they haven't replied by 16/17 of the month, they get sent another one explaining that if their return is not submitted by 19th they will get a £100.00 fine.  I'm not going to lie on either their or my behalf.

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08th Mar 2016 12:41

Correct

claudialowe wrote:

If you assume you make an ASS[***] out of U and ME. I wouldn't be at all happy ticking the box on the return without confirmation from the client first. I send CIS contractors an email on 7/8 of the month, and if they haven't replied by 16/17 of the month, they get sent another one explaining that if their return is not submitted by 19th they will get a £100.00 fine.  I'm not going to lie on either their or my behalf.

Hi Claudia, you are of course correct in what you say and it doesn't happen every month, he's just a very disorganised guy with paperwork pretty much the last thing on his mind, compared to the other contractor I have whose payments are emailed to me on the 6th of every month :). Even if I chased him, half the time he wouldn't know how much he'd paid in a month until he had his bank statements. He also never really knows how much he's had deducted by contractors. If you could train him that would be great :)

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By cbp99
08th Mar 2016 12:31

@OP

Am i correct in thinking that no returns (as opposed to nil returns) were submitted for earlier months?

 

Or did HMRC pick up on the fact that following a sequence of nil returns the contractor suddenly appeared to be extremely busy!?

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08th Mar 2016 12:47

Ditching!

Trying to ditch the untrainables - my New Year's (well 1st Feb) resolution was to offload those ones.  New company motto - "my way or the highway"

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08th Mar 2016 12:54

Ditching

claudialowe wrote:

Trying to ditch the untrainables - my New Year's (well 1st Feb) resolution was to offload those ones.  New company motto - "my way or the highway"

 

I'd only have one client in that case (me:))

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08th Mar 2016 13:07

Notwithstanding the wherewithawls, since the penalty is not tax geared, and if a submission should have been made for every month, just tell HMRC that rather than re-submitting every month. They only want to know for penalty purposes, and so are only interested in how many submissions are late.

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09th Mar 2016 14:15

Agree with SteLacca

...which was going to be my suggestion too.  Definitely would not file a 'nil' return just because the client hasn't given the details in a timely fashion.  I've had a few clients suggesting this, just out of pure laziness and so I suggested they find someone else!

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By aes-tax
10th Mar 2016 08:53

CIS penalties

If any return is 6 months or more late then there is the potential for the penalty to become tax based - so HMRC would be correct in asking for the payment details to be shown for each tax month. Just a reminder of those penalties:

1 day late       - £100

2 months late - £200

6 months late - Greater of £300 or 5% of the CIS deductions on that return

12 months late - Greater of £300 or 5% of the CIS deductions on that return

 

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10th Mar 2016 09:40

Stuck

Short of coming to some deal with HMRC, you're stuck with going by the rules, which is splitting it up into the appropriate months.

If the penalty was flat rate every month you could say that there's a return every month and it's so many at £100 and so many at £200.  But it's that 5% that stops you from dealing with any return over six months late in that way.

And it's 5% of the deductions on the return.  Not 5% of what he owes.  His laziness is going to prove very expensive.

EDIT

Actually, depending on the scale of operations, you might be able to do a deal at £300 a month for the older ones.  £300 will be more than 5% unless he deducts over £6000.

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By aes-tax
10th Mar 2016 10:01

Assuming that the amounts of CIS deductions that should have been shown on the returns were less than £6000 the potential penalties for each of those monthly returns would be:

Initially late                                     £100

2 months late                                 £200

6 months late                                 £300

12 months late                                £300

Total                                               £900

So for every monthly return that is submitted 12 months the minimum penalty will be £900. If there are a years worth of returns submitted late (12 months after the first of those returns was due) the potential minimum penalty would be £3500 (12 x 100 + 10 x 200 + 6 x 300 + 1 x 300). Clearly this will increase if the CIS tax shown on each return exceeded £6000 and where more than one years worth of returns are late.

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10th Mar 2016 13:48

Offer

I'd be thinking of saying to HMRC, "Look, he can't afford all this penalty, it'll put him out of business; how about £x  with the rest suspended ?"

Obviously, that assumes that he indeed can't afford the penalty.

But what do you have to lose ?

Taxpayer can't complain - he's just been an idiot.

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By rossmcv
10th Mar 2016 14:59

thanks for all the responses. food for thought

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