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!