How can I appeal a CIS penalty?

Learn how to appeal a CIS penalty from HMRC. Understand the common reasons for fines, how to challenge them, and what evidence you need to support your appeal.

The Construction Industry Scheme (CIS) requires contractors to file monthly returns, verify subcontractors, and pay deductions to HMRC on time. Failing to do so can lead to penalties that quickly add up, especially if you miss multiple deadlines.

If you have received a CIS penalty notice, it is not always final. You can appeal if you believe the penalty was issued in error or if you have a valid reason for missing the deadline. Acting promptly and providing the right information can help reduce or even cancel the fine.

This article explains how to appeal a CIS penalty, what qualifies as a reasonable excuse, and how to stay compliant in the future.

Why you might receive a CIS penalty

HMRC issues CIS penalties for a range of compliance failures, including:

  • Missing the monthly CIS return deadline (usually the 19th of each month).

  • Submitting incorrect information about subcontractors or payments.

  • Failing to verify subcontractors before payment.

  • Paying subcontractors without making the correct CIS deductions.

The most common penalties relate to late or missing CIS returns. Even if no payments were made in a particular month, you must still file a nil return.

CIS penalty amounts

CIS penalties increase the longer a return remains outstanding:

  • 1 day late: £100 fixed penalty.

  • 2 months late: £200 fixed penalty.

  • 6 months late: The greater of £300 or 5% of the CIS deductions.

  • 12 months late: The greater of £300 or 5% of the CIS deductions (plus potential higher penalties if HMRC believes the delay was deliberate).

If you have multiple late returns, these penalties can apply separately for each one, quickly leading to large sums owed.

When you can appeal a CIS penalty

You can appeal a CIS penalty if:

  • You believe the penalty was issued incorrectly.

  • You filed the return on time and have proof.

  • You have a reasonable excuse for missing the deadline.

HMRC considers a range of circumstances as reasonable excuses, provided you acted promptly once the issue was resolved.

Examples of reasonable excuses

You may be able to appeal successfully if you can show that one of the following applied:

  • Illness or an emergency prevented you from submitting the return.

  • HMRC’s online system or software failed during submission.

  • Unexpected postal delays affected paper submissions.

  • A fire, flood, or theft destroyed your records.

  • Death or serious illness of a close family member occurred near the deadline.

  • You were waiting for subcontractor verification from HMRC and could not complete the return on time.

You must also show that you filed the return as soon as you reasonably could once the issue was resolved.

How to appeal a CIS penalty

You can appeal a CIS penalty online or by post.

Option 1: Appeal online

If you file CIS returns through your HMRC online account:

  1. Log in to your account.

  2. Go to the penalty notice section.

  3. Select the penalty you want to appeal.

  4. Enter your reasons for appeal and attach any supporting evidence (such as screenshots or medical notes).

  5. Submit the appeal directly to HMRC.

Option 2: Appeal by post

If you prefer to appeal in writing, send a letter to HMRC including:

  • Your company name and Unique Taxpayer Reference (UTR).

  • The penalty reference number.

  • The date and reason for the penalty.

  • Your explanation or evidence for appeal.

Send your letter to:
HMRC CIS
Construction Industry Scheme
HMRC
BX9 1BX
United Kingdom

HMRC will review your appeal and write back with their decision.

What happens after you appeal

After reviewing your case, HMRC may:

  • Cancel the penalty entirely.

  • Reduce the penalty amount.

  • Reject your appeal if they do not agree with your reasons.

If your appeal is rejected and you still believe it is unfair, you can request an independent review by another HMRC officer. If the review upholds the decision, you can escalate your case to the First-tier Tax Tribunal.

How long you have to appeal

You must appeal within 30 days of the date on the penalty notice. If you miss this deadline, HMRC can refuse your appeal unless you have a strong reason for the delay.

Evidence to include in your appeal

To strengthen your appeal, provide as much supporting evidence as possible, such as:

  • Proof of online filing or submission confirmation.

  • Copies of correspondence with HMRC.

  • Bank statements showing payment on time.

  • Medical notes or hospital records if illness prevented submission.

  • Photographs or insurance claims if records were destroyed.

  • Technical support emails if software or system issues occurred.

The more evidence you can provide, the greater your chances of success.

Avoiding future CIS penalties

To prevent future penalties:

  • Set calendar reminders for CIS return deadlines.

  • File nil returns even if you made no payments.

  • Verify all subcontractors before payment.

  • Use reliable CIS software that confirms submissions.

  • Check regularly that your returns have been accepted by HMRC.

  • Keep accurate records of payments, deductions, and communications.

Having an accountant manage your CIS can also help ensure returns are filed correctly and on time every month.

How an accountant can help with CIS penalties

An accountant experienced in the construction sector can:

  • Review your penalty notice and determine if you have grounds for appeal.

  • Prepare a written appeal with supporting evidence.

  • Communicate directly with HMRC on your behalf.

  • File CIS returns accurately and on time to avoid future fines.

  • Manage payroll and subcontractor verification efficiently.

Professional advice often saves time, reduces stress, and increases the likelihood of a successful appeal.

The bottom line

If you receive a CIS penalty, do not panic and do not ignore it. Penalties can often be reduced or cancelled if you act quickly and have a valid reason for missing the deadline.

Appealing online or by post within 30 days gives you the best chance of success. Always include clear evidence and a full explanation of your circumstances.

To avoid future issues, make sure CIS returns are filed on time every month and keep accurate records of all submissions. Working with an accountant ensures your business remains compliant, saving you both money and peace of mind.