What Happens If I Miss a CIS Payment Deadline?

At Towerstone Accountants we provide specialist CIS accountancy services for contractors, subcontractors, and construction businesses across the UK. We created this webpage for people working in construction who want clear guidance on CIS deductions, refunds, verification, and monthly return responsibilities, without jargon. Our aim is to help you stay compliant with HMRC, avoid penalties, and keep your cash flow and records under control.

This is a question that usually comes with a knot in the stomach. A letter arrives from HMRC, a reminder pings through online services, or you suddenly realise a payment date has passed and nothing has gone out. With CIS, missing a deadline can feel more serious than missing other tax dates, partly because you are dealing with money that was deducted from someone else’s pay, and partly because the penalty system can escalate quietly if you are not paying attention.

In my experience, missing a CIS payment deadline is rarely about deliberate avoidance. It is usually caused by cash flow pressure, confusion between PAYE and CIS, or simple oversight during a busy period. What matters most is understanding what happens next, how quickly issues can grow, and what you can do to limit the damage.

In this article I am going to explain exactly what happens if you miss a CIS payment deadline. I will cover what HMRC expects, what penalties and interest can apply, how missed payments interact with returns, and what practical steps you should take as soon as you realise something has been missed. My aim is to replace panic with clarity, because once you understand the process, it becomes much easier to deal with.

What the CIS payment deadline actually is

Before looking at consequences, it is important to be clear on what deadline we are talking about.

Under CIS, contractors deduct tax from subcontractors’ payments and then pay that deducted tax over to HMRC. This payment is normally due by the 22nd of the month following the end of the CIS tax month, if you pay electronically. The CIS tax month runs from the 6th to the 5th.

So, for example, deductions made on payments between 6 May and 5 June are due to HMRC by 22 June.

This CIS payment is usually made alongside PAYE tax and National Insurance, but it is accounted for separately. Missing this payment is different from missing a CIS return deadline, although the two are closely linked.

First point to understand, the money is not yours

One of the most important things I explain to clients is that CIS deductions are not business funds.

When you deduct CIS from a subcontractor, you are holding that money on behalf of HMRC. In HMRC’s eyes you are acting as a collector, not as the person being taxed.

This is why HMRC treats missed CIS payments seriously. From their perspective, the tax has already been taken from the subcontractor, so any delay in passing it on looks like a failure of trust rather than a normal cash flow issue.

Understanding this helps explain why penalties and interest apply more quickly than some people expect.

What happens immediately after you miss the deadline

If you miss a CIS payment deadline by a few days, there is usually no instant enforcement action.

HMRC systems will show the amount as overdue and interest will begin to accrue from the due date. You may also receive an automated reminder or a notice showing the balance outstanding.

At this stage the situation is still very manageable, provided you act quickly. Paying the outstanding amount as soon as possible limits interest and reduces the risk of escalation.

The biggest problems arise when missed payments are ignored rather than addressed.

Interest on late CIS payments

Interest is charged automatically on late CIS payments.

The interest runs from the day after the payment was due until the day it is actually paid. It is calculated daily, so the longer the delay, the more interest builds up.

While interest alone is rarely huge for short delays, it becomes more noticeable if payments are left outstanding for months rather than weeks.

Importantly, interest is not a penalty. It cannot be appealed in the same way. It is simply a charge for paying late.

Penalties for missing CIS payment deadlines

In addition to interest, HMRC can charge penalties for late payment.

Late payment penalties for CIS are usually aligned with PAYE late payment penalties, because CIS payments are made through the PAYE system. These penalties are based on how late the payment is and how often you pay late.

Typically, penalties increase if payments are:.

• 30 days late

• 6 months late

• 12 months late

The more frequently you miss deadlines, the more likely penalties are to apply and the higher they can become.

Occasional short delays may not always trigger penalties immediately, but repeated or long delays almost certainly will.

How missed CIS payments interact with CIS returns

Missing a payment deadline is often linked to missing or late CIS returns, but they are technically separate obligations.

You can submit your CIS return on time but still miss the payment deadline, or you can pay on time but submit the return late.

However, in practice, when one thing slips, others often follow. This is where problems start to compound.

Late CIS returns carry their own penalties, starting at £100 and increasing over time. If you miss both the return and the payment deadlines, you can end up with penalties and interest stacking up from different directions.

What HMRC does if payments remain unpaid

If a CIS payment remains unpaid for an extended period, HMRC’s response escalates.

Initially this may involve reminder letters and statements showing the balance due. If the debt continues to be ignored, HMRC may pass the case to their debt management team.

At this stage you may receive more formal communications, phone calls, or demands for payment. HMRC may ask for an explanation and expect a plan.

Ignoring correspondence at this point is one of the worst things you can do. Engagement matters.

Time to Pay arrangements for CIS debts

If you cannot pay the CIS amount in full by the deadline, one of the most important options available is a Time to Pay arrangement.

A Time to Pay arrangement allows you to spread the outstanding amount over an agreed period, rather than paying it all at once.

HMRC will usually expect you to:.

• Contact them as soon as possible

• Explain why you cannot pay

• Demonstrate that the problem is temporary

• Show that you can keep up with future obligations

Time to Pay does not remove interest, but it can prevent further enforcement action and reduce stress significantly.

Why acting early makes a big difference

One clear pattern I see is that early action leads to far better outcomes.

If you contact HMRC before or shortly after the deadline, explain the situation, and make a payment or propose a plan, HMRC is generally far more reasonable.

If you wait until months have passed, letters have piled up, and the balance has grown, HMRC’s tone and options become more limited.

From a practical point of view, picking up the phone early often saves weeks of worry later.

What happens if CIS payments are missed repeatedly

Repeated missed CIS payments are treated much more seriously than one-off slips.

HMRC may begin to view the business as high risk, which can lead to closer monitoring, more frequent contact, and in some cases compliance checks.

In severe cases, HMRC can take enforcement action such as debt collection proceedings or, in extreme situations, issuing winding up petitions for companies.

This is rare, but it does happen where CIS debts are large and consistently ignored.

The impact on subcontractors and relationships

Although the CIS payment is technically your responsibility as a contractor, missing deadlines can also damage relationships with subcontractors.

Subcontractors rely on CIS statements and accurate reporting so they can claim deductions on their tax returns. If payments and reporting are delayed or incorrect, it can affect their refunds and cause frustration.

Over time this can damage trust and make it harder to retain good subcontractors.

What if you realise late that you missed a payment

If you suddenly realise that a CIS payment deadline has passed, the most important thing is not to panic.

The practical steps I usually recommend are:.

• Check exactly what is outstanding and for which period

• Make payment as soon as possible if you can

• If you cannot pay in full, contact HMRC immediately

• Keep records of what you have done and when

Even paying part of the amount shows willingness and reduces the balance on which interest is charged.

Can penalties be appealed

In some cases penalties for late payment can be appealed.

HMRC may consider appeals where there was a reasonable excuse, such as serious illness, bereavement, or unexpected events outside your control.

Cash flow problems alone are rarely accepted as a reasonable excuse, but combined with other factors they may be considered.

Appeals need to be made promptly and supported with clear explanations and evidence.

How limited companies and sole traders are treated

The underlying rules are similar whether you are a sole trader or a limited company, but the consequences can feel different.

For limited companies, missed CIS payments sit alongside other PAYE obligations and can affect the overall HMRC account. Directors may feel more pressure because company compliance issues can escalate quickly.

For sole traders, CIS debts are personal debts and sit alongside Income Tax and National Insurance obligations.

In both cases, engagement and communication remain key.

How to prevent missed CIS payment deadlines in future

Once you have dealt with a missed deadline, the next step is prevention.

This often involves simple but effective changes, such as:.

• Separating CIS deductions into a dedicated bank account

• Setting calendar reminders for payment dates

• Using accounting software with CIS tracking

• Reviewing cash flow regularly rather than reactively

The goal is to remove reliance on memory and reduce the chance of oversight.

The role of an accountant when deadlines are missed

When I help clients who have missed CIS payment deadlines, my role is usually part practical and part calming.

I help identify exactly what is owed, contact HMRC where needed, arrange Time to Pay if appropriate, and make sure future processes are tightened up.

Often the biggest relief for clients is simply understanding that the situation is fixable, which it almost always is if addressed early.

Why ignoring the problem is the worst option

The worst thing you can do after missing a CIS payment deadline is nothing.

HMRC systems do not forget, and unpaid amounts do not disappear. Interest and penalties build quietly in the background, and letters become firmer over time.

Engagement, even if the conversation feels uncomfortable, nearly always leads to a better outcome than silence.

Final thoughts

Missing a CIS payment deadline is not the end of the world, but it is not something to brush off either.

Interest starts immediately, penalties can follow, and repeated issues can attract unwanted attention. However, HMRC’s response is heavily influenced by how quickly and how openly you deal with the situation.

From my experience, the contractors who handle missed deadlines best are not those who never slip up, but those who act quickly, communicate clearly, and put systems in place to stop it happening again.

If you find yourself in this position, focus less on the mistake and more on the response. In most cases that response makes all the difference.

You may also find our guidance on What are the deadlines for CIS submissions and What penalties apply for late CIS returns helpful when dealing with related CIS questions. For a broader overview of CIS rules, compliance, and support, you can visit our cis guidance hub.