ECH21255 - CIS from 06-04-07 - Incorrect Monthly Returns

Section 98A(4) TMA 1970 provides a duty geared penalty for fraudulently or negligently submitting an incorrect return ECH21050.

The maximum penalty before abatements is an amount equal to the difference between the amount returned and the amount which should have been returned.

For example, a form CIS300 which returns £8,000

• where it is later demonstrated that
• £14,000 of CIS deductions should have been returned
• attracts a maximum penalty before abatements of £6,000.

Some practical examples of calculating penalties for incorrect returns are attached.

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

• give the contractor advice on how to correct mistakes at the earliest opportunity

This will assist the contractor in making sure that subsequent returns are correct.

Note that these penalties are based on 100% of the tax difference or the tax underpaid and are subject to Article 6 of ECHR ( ECH8026)

The CIO should

• provide HRA advice and
• issue factsheet EC/FS4

to the contractor at the earliest opportunity. ( ECH8027)

If it has been necessary to issue formal determinations consideration should be given to making penalty determinations ( ECH21135) at the same time and listing all appeals for the same Commissioners hearing.