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Abolish penalties for nil HMRC returns, specifically CIS

Comment 10th August 2010

To abolish penalties on late returns made to HMRC which are in fact nil and do not show any activitiy.  Specifically I would refer to CIS returns where the penalties are so draconian that you will be fined £100 for a late submission and then an extra £100 for each month it is late after that.

This punitive system means that penalties can increase to enormous proportions!

Why does this matter?

If a company is under the Construction Industry Scheme (CIS) then it may be considered to be both a contractor and a subcontractor.

As a contractor, the company must submit monthly CIS returns showing amounts paid to any subcontractors used, along with the CIS tax deducted.  These returns must be submitted online.

As with many small businesses, especially in the construction industry, this is a bind which hinders the running of the business.  What HMRC fail to understand is that many traders are not computer literate and some do not even understand the concept of online filing.

I can fully understand the need to impose penalties as it a) encourages timely submission of returns and b) brings in revenue for the treasury (cynics would say this is the most important point!).

So, if a business does not make use of subcontractors for many months then they may simply forget to file the CIS return as it does not show anything at all.  In such a scenario this may be discovered months (if not over a year) down the line when HMRC have the good courtesy (no sarcasm intended) to heap penalties notices in the post with no prior warning!

Nil return penalties must be cancelled as they are simply not fair.  Small businesses are punished enough and have enough red tape as it is.  They did not need this ridiculous burden to add to the stress! 

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