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.

CIOs must

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

Where CIT staff pursue this penalty they should ensure that DMB do not duplicate it.

Where the penalty is to be sought as part of the review the CIO must

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

Where a CIO is involved with a contractor where returns are outstanding beyond 12 months they should

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

Where a contractor submits a return during the review 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 also need to be considered ECH21255.

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

• 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.