What Happens If I Miss a CIS Payment Deadline?

Missing a CIS payment deadline can lead to fines and interest from HMRC. Find out what happens, how to fix it quickly, and how to avoid future penalties.

Introduction

If you work in the construction industry and are registered under the Construction Industry Scheme (CIS), you must make monthly payments to HMRC for the tax deducted from your subcontractors. These payments are a legal requirement, and missing a CIS payment deadline can lead to fines, interest charges, and additional compliance problems.

Many contractors underestimate the importance of timely CIS submissions, but HMRC takes late payments seriously. This article explains what happens if you miss a CIS payment deadline, how penalties are calculated, and what steps you can take to get back on track.

Understanding CIS Payment Deadlines

As a contractor, you must deduct tax from payments made to subcontractors under the CIS rules and pass those deductions to HMRC. These deductions are due monthly, alongside your PAYE and National Insurance contributions if you operate payroll.

The CIS deadlines are:

  • The CIS return must be submitted to HMRC by the 19th of each month.

  • Any CIS payments due to HMRC must be received by:

    • The 19th if you pay by post.

    • The 22nd if you pay electronically.

Each payment covers deductions made during the previous tax month, which runs from the 6th of one month to the 5th of the next.

What Happens If You Miss the Deadline

If you miss the payment or return deadline, HMRC can issue penalties and charge interest on the overdue amount. The severity of the penalty depends on how late you are.

There are two separate obligations under CIS — filing returns and making payments — and both can trigger penalties if missed.

1. Late CIS Return Penalties

If you fail to submit your monthly CIS return on time, HMRC will issue an automatic fine. The penalty increases the longer the return remains outstanding:

  • 1 day late: £100 penalty.

  • 2 months late: Additional £200 penalty.

  • 6 months late: £300 penalty or 5% of the CIS deductions (whichever is greater).

  • 12 months late: £300 penalty or 5% of the CIS deductions (whichever is greater).

For serious or deliberate failures, HMRC can impose higher penalties, potentially up to 100% of the deductions.

Even if you did not pay any subcontractors in a particular month, you must still file a nil return by the deadline to avoid penalties.

2. Late CIS Payment Penalties

If you submit your return but miss the payment deadline, HMRC will charge interest and may add penalties if the payment remains outstanding.

  • Interest: Charged daily from the day after the due date until the payment is made. The rate is based on HMRC’s current interest rate, which is typically several percentage points above the Bank of England base rate.

  • Late payment penalties: If your payments are repeatedly late, HMRC can apply additional penalties or consider your compliance history when reviewing your tax account.

If you continue missing payments, HMRC may contact you directly or refer your case to their debt management team for collection.

3. Persistent Non-Compliance

Repeatedly missing CIS deadlines can lead to serious consequences, including:

  • HMRC withdrawing your gross payment status, which allows you to be paid without deductions.

  • Increased scrutiny of your CIS records and tax returns.

  • Possible legal enforcement action to recover outstanding amounts.

  • Damage to your business reputation with subcontractors and clients.

For businesses with ongoing contracts, losing gross payment status can be particularly damaging, as it impacts cash flow and credibility in the industry.

How to Correct a Missed Payment or Return

If you realise you have missed a CIS payment or filing deadline, act quickly to minimise penalties.

  1. Submit the late CIS return immediately.
    Even if it is late, submitting it as soon as possible stops further penalty increases.

  2. Pay any outstanding amounts promptly.
    Pay electronically to ensure it reaches HMRC by the next available deadline.

  3. Contact HMRC.
    If you are struggling to pay, contact HMRC’s Business Payment Support Service to arrange a Time to Pay agreement. This can spread your payments over several months.

  4. Check for errors.
    Make sure the missed deadline was not due to a system or verification error, and review your processes to prevent it from happening again.

Appealing a CIS Penalty

You can appeal a CIS penalty if you believe it was issued unfairly or if you had a reasonable excuse for missing the deadline. Valid reasons may include:

  • A serious illness or family emergency.

  • Problems with HMRC’s online systems.

  • Unavoidable postal delays.

  • Natural disasters or extreme weather affecting operations.

Appeals must usually be made within 30 days of receiving the penalty notice. You should explain the reason clearly and provide evidence where possible.

Preventing Future CIS Payment Issues

To avoid future CIS payment problems, put clear systems in place for managing deadlines. Best practices include:

  • Setting automated reminders for CIS return and payment dates.

  • Using CIS-compliant accounting software to track deductions and submit returns electronically.

  • Reconciling payments and deductions regularly.

  • Reviewing your subcontractor records to ensure all details are up to date.

  • Delegating CIS management to your accountant to ensure accuracy and compliance.

Having a professional handle your CIS administration is often the easiest way to stay on top of deadlines and avoid HMRC penalties.

Example Scenario

Jake runs a small construction company and employs several subcontractors. In June, he forgets to file his CIS return and pay HMRC. When he realises in July, the return is 30 days late, and HMRC issues a £100 penalty. He submits the return immediately and pays the outstanding amount, but interest is also charged for the late payment.

After discussing it with his accountant, Jake sets up an automated reminder system and authorises his accountant to handle future CIS filings. The following months run smoothly, and no further penalties are incurred.

How an Accountant Can Help

An accountant can take the stress out of CIS administration by:

  • Submitting CIS returns accurately and on time.

  • Ensuring the correct deductions are made for each subcontractor.

  • Paying HMRC electronically to avoid postal delays.

  • Managing record keeping and reconciliation.

  • Communicating with HMRC on your behalf if a payment is missed or disputed.

This professional support not only keeps you compliant but also gives you peace of mind that your business is meeting its legal obligations.

Conclusion

Missing a CIS payment or return deadline can result in fines, interest, and even the loss of your gross payment status. Acting quickly to submit returns and pay outstanding amounts can reduce the financial impact, while setting up proper systems will help prevent future issues.

If you regularly struggle with CIS deadlines, working with an accountant who understands the scheme can save you time, money, and stress. By staying organised and proactive, you can keep your business compliant and avoid costly penalties from HMRC.