CIS Penalties for Late Filing & Payment

Key facts

A £100 fixed penalty applies for each late monthly CIS return, increasing to £200 after 2 months.
Daily penalties of £10 per day can be charged after a return is 6 months late (up to 90 days).
Returns over 12 months late attract a tax-geared penalty based on the deductions reported.
Late payment of CIS deductions to HMRC can result in interest charges and payment penalties.
Penalties are charged per return — multiple missed returns result in multiple penalties.

Overview of CIS Penalties

HMRC’s penalty regime for CIS is designed to encourage timely filing of monthly returns and prompt payment of deductions. The penalties escalate the longer a return remains outstanding, starting with fixed penalties and progressing to potentially significant tax-geared charges.^[1]

Penalties apply to contractors (not subcontractors), as contractors are responsible for filing CIS returns and paying over deductions.

Late Filing Penalties

The penalty structure for late CIS returns follows the same framework used for other HMRC filing obligations (Schedule 55 of the Finance Act 2009):^[2]

Period Late	Penalty	Details
1 day late	£100 fixed	Automatic penalty for each return filed late
2 months late	£200 fixed	Additional fixed penalty if still not filed after 2 months
6 months late	£300 or 5% of deductions (whichever is greater)	A significant escalation for extended defaults
12 months late	£300 or tax-geared percentage (whichever is greater)	Tax-geared penalty: 5% to 100% depending on behaviour

Tax-Geared Penalty Rates (12+ Months Late)

The tax-geared element for returns over 12 months late depends on the nature of the failure:^[3]

Behaviour	Unprompted Disclosure	Prompted Disclosure
Non-deliberate failure	5%	5%
Deliberate but not concealed	20%	70%
Deliberate and concealed	30%	100%

Multiple returns: Each monthly CIS return is a separate filing obligation. If you miss 3 monthly returns, you receive 3 separate £100 penalties (totalling £300), not a single penalty. This can add up quickly for contractors who fall behind.

Daily Penalties

For returns that are more than 6 months late, HMRC may also charge daily penalties of £10 per day for up to 90 days (£900 maximum). In practice, these are less commonly imposed than the fixed and percentage penalties, but they remain available to HMRC.^[2]

Late Payment Penalties

Separate from filing penalties, HMRC can also charge penalties and interest on late payment of CIS deductions:

Interest is charged on CIS deductions paid late, from the due date to the date of payment
Payment penalties may apply for persistent late payment, following a graduated approach
The due date for payment is the 22nd of the month following the tax month (or 19th if paying by post)

Nil Returns

If you made no payments to subcontractors during a tax month, you must still either:^[1]

File a nil CIS return for the month, or
Notify HMRC that you are inactive (if you do not expect to make payments for a period)

Failure to file a nil return triggers the same £100 penalty as a late return with data on it. Setting your CIS status to inactive with HMRC avoids the need to file nil returns each month.

Tip: If you have no subcontractor payments for an extended period, contact HMRC to set your CIS contractor account to inactive. This suspends the filing requirement until you reactivate. This is much better than filing nil returns month after month.

Reasonable Excuse and Appeals

You can appeal against a CIS penalty if you have a reasonable excuse. HMRC accepts excuses such as:^[2]

Serious illness (of yourself or an immediate family member) that prevented filing
Bereavement of a close family member
Fire, flood, or natural disaster that destroyed records or prevented access
HMRC system outage that prevented online filing on the due date

Excuses that are not generally accepted: forgetting the deadline, pressure of work, relying on an agent who failed to file on time, or not knowing you needed to file.

Appeals should be made within 30 days of the penalty notice. You can appeal online, by phone, or in writing.

Frequently Asked Questions

What happens if I file a CIS return one day late?

You receive an automatic £100 fixed penalty. This applies even if the return is only one day late. The penalty is per return, so if you have multiple late returns, you receive a £100 penalty for each one.

Can I appeal a CIS penalty?

Yes. You can appeal if you have a reasonable excuse for the late filing. Reasonable excuses include serious illness, bereavement, fire or flood destroying records, or HMRC system failures. Forgetting, relying on a third party who let you down, or being too busy are generally not accepted as reasonable excuses. Appeals must normally be made within 30 days.

Do penalties apply to nil returns?

If you have no payments to subcontractors in a month, you must still file a nil return (or notify HMRC of inactivity). Failure to file a nil return can result in a £100 penalty, as HMRC has no way of knowing you had no payments to report.

What is a tax-geared penalty?

A tax-geared penalty is calculated as a percentage of the CIS deductions that should have been reported on the return. It applies when a return is more than 12 months late. The percentage ranges from 5% (for non-deliberate failures) up to 100% (for deliberate and concealed failures).

Sources

CIS: penalties for late filing — GOV.UK
CIS: penalty provisions (CISR85000) — HMRC
Finance Act 2009, Schedule 55 — legislation.gov.uk