ECH21250 - CIS from 06-04-07 - Failure to Submit a Monthly Return - Over 12 Months of Lateness

Section 98(A)(2)(b) TMA 1970 provides a further penalty, not exceeding £3,000, in addition to the Section 98A(2)(a) monthly penalty ECH21245, where the failure continues beyond 12 months.

For example, if the November 2007 monthly return was not made by 19 November 2008, this additional penalty should be sought.

To arrive at an appropriate amount the penalty is calculated on a tariff basis which calculates the penalty according to the number of offences within a 12 month period.

The tariff amounts are as follows

Any subsequent offences within the 12 month period will attract a penalty of £3,000 per offence. See further examples of how this penalty is calculated.

As with the penalties for the first 12 months of lateness, (ECH21245) the CIS system will automatically issue these penalties where HMRC is expecting a return.

You must 

• ensure that penalties are pursued wherever a failure to submit a return has occurred.

Where you pursue this penalty you should ensure that DMB do not duplicate it.

Where the penalty is to be sought as part of the compliance check you must 

• liaise with DMB and
• arrange for the CIS system to be inhibited if necessary (ECH14265).

Where you are involved with a contractor where returns are outstanding beyond 12 months you should

• seek a contract settlement to include the liability outstanding, interest and penalties.

Where a contractor submits a return during the compliance check this should be date stamped and sent to the Processing Centre, Netherton with a covering memo.

Where a late return is found to be incorrect Section 98A(4) penalties for returns due prior to 1st April 2009 (ECH21255) Schedule 24 for returns due from 1st April 2009 (CH81000 onwards) also need to be considered.

Because the CIS300 return is a monthly return it is important that you

• discuss failure to submit returns with the contractor as soon as the problem is identified.

This will encourage the contractor to submit subsequent returns on time and prevent further penalties accruing.