CIS penalties: A nice little earner!

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Figures revealed in Hansard indicate that CIS penalties are turning into a nice little earner for the Treasury, reports Tax Lecturer of the year, Rebecca Benneyworth.

The number of penalty notices issued for late CIS monthly returns are shown as:

  • October 200735,919

  • November 200744,921

  • December 200737,618

She adds, "So a total of 118,458 notices were issued in a three month period, bringing in fines of at least 11.8 million (as the minimum penalty is 100). Assuming that these three months are representative of a normal quarter, this would bring an annual yield from penalties for the new CIS 300 to over 47 million."

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By pjb488
18th Feb 2008 21:27

CIS penalties
I have a client where HMRC have accepted - and acknowleged this in writing - that the return to 5 June was correctly submitted but their "system" insists on sending out a penalty notice of £100 each month for the period where they accept they were/are in error. I suspect that the actual problem is that the return was submitted in June rather than October. Apparently the only solution is to keep appealing!! Probably time to raise them a bill?

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18th Feb 2008 17:09

Iniquitous penalties
The whole system of tax penalties is unfair,excessive and occasionally dishonest. Last year we had the position of HMRC waiting until about November and then "pouncing" on contractors for late 2006/07 CIS Returns and levying penalties of £400 or more ; this had no regard of whether any tax was owing, it was simply an excessive fine for a bit of forgetfulness. In the same way, Self Assessment Surcharges at 5% for being just over the 28-day limit can give rise to effective interest rates that in our hands would give rise to a charge of usury. It is the job of HMRC to collect tax and charge interest when it is overdue to compensate HM Treasury.; it should not be fining the people who are least able to cope with the system, i.e. small busisnessmen who do not have the resources of Bovis etc to cope with it.

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16th Feb 2008 00:07

I did suspect as much Rob. I wonder how many will be "real".

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By Anonymous
15th Feb 2008 15:47

Issued, but not necessarily valid...
Whilst 118,458 penalty notices were issued, how many were valid (and for which the penalty therefore applies) as opposed to issued in error? I have appealled against 12 penalty notices for the periods mentioned, of which seven have been discharged and I expect the balance to be as well.

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