What Penalties Apply for Late CIS Returns

If you are a contractor operating under the Construction Industry Scheme (CIS), you must file a monthly return to HMRC showing how much you paid your subcontractors and how much tax you deducted. Submitting these returns late can lead to automatic penalties, which increase the longer the return remains outstanding. Even if you have not paid any subcontractors in a given month, you still need to file a return or a “nil return.” This article explains what penalties apply for late CIS returns, how HMRC calculates fines, and how to prevent future delays.

When CIS returns are due

CIS returns must be submitted to HMRC by the 19th of each month, covering payments made to subcontractors in the previous tax month.

For example, payments made between 6 July and 5 August must be reported by 19 August.

You must also provide subcontractors with payment and deduction statements for the same period.

If you miss this deadline, HMRC’s system automatically issues a penalty, even if you had no payments to report.

Penalties for late CIS returns

HMRC charges penalties based on how late the return is. The longer the delay, the higher the fine.

One day late

If you miss the 19th-day deadline, HMRC immediately issues a £100 penalty for each return that is late.

Two months late

If the return is still outstanding after two months, an additional £200 penalty is charged.

Six months late

If your CIS return remains unfiled after six months, HMRC adds a further £300 penalty or 5% of the CIS deductions shown on the return, whichever is higher.

Twelve months late

If the return is more than a year late, another penalty applies:

  • A fixed £300 fine, or

  • 5% of the CIS deductions on the return, whichever is greater.

In serious cases, HMRC can increase the penalty up to £3,000 per return if it believes the delay was deliberate and the contractor tried to conceal the information.

Example of penalties

If a contractor fails to submit a CIS return for an entire year, the total penalties could reach:

  • £100 after one day.

  • £200 after two months.

  • £300 after six months.

  • £300 after twelve months.

Total: £900 for one missed return, before considering any additional charges for concealment.

If multiple months are missed, penalties apply to each return separately, so the total can quickly add up.

Nil returns and penalties

Even if you have not paid any subcontractors during a tax month, you must still submit a nil return by the 19th of the following month.

Failing to submit a nil return attracts the same penalties as a standard return. HMRC does not make exceptions for inactivity, so always file on time regardless of whether payments were made.

Appeals and reasonable excuses

If you receive a late CIS filing penalty, you can appeal to HMRC if you have a reasonable excuse for missing the deadline.

HMRC accepts appeals for reasons such as:

  • Serious illness or hospitalisation.

  • Death or bereavement of a close family member.

  • Computer or internet problems outside your control.

  • HMRC system downtime or technical errors.

  • Natural disasters or unforeseen emergencies.

However, forgetting to file, being busy, or not understanding the rules are not considered valid excuses.

You must submit your appeal within 30 days of receiving the penalty notice, explaining your circumstances and providing evidence if possible.

If HMRC agrees your reason is reasonable, the penalty may be cancelled or reduced.

Daily penalties for repeated non-compliance

If a contractor repeatedly misses filing deadlines or fails to respond to penalty notices, HMRC may impose additional daily penalties.

These fines can range from £10 per day for up to 90 days in addition to the standard fixed penalties.

In extreme cases, HMRC can also open a compliance check or investigation into your business to review your CIS processes and payments.

How to avoid late CIS penalties

Avoiding penalties is straightforward if you stay organised and proactive.

  • Set reminders: Mark the 19th of every month in your calendar or use accounting software alerts.

  • File early: Submit your CIS return as soon as possible after the 5th of each month to allow for errors or technical delays.

  • Use CIS-compliant software: Modern payroll and accounting tools can automatically generate and submit returns to HMRC.

  • Delegate responsibility: If you are busy running projects, ask your accountant to manage your CIS submissions on your behalf.

  • Keep accurate records: Store subcontractor details, verification numbers, and deduction statements in one place for easy access.

Good organisation ensures compliance and prevents unnecessary fines.

How an accountant can help

CIS rules can be complex, and many small contractors struggle to keep up with monthly reporting deadlines while managing day-to-day business operations. An accountant can help by:

  • Verifying subcontractors and calculating the correct deductions.

  • Preparing and submitting monthly CIS returns on time.

  • Keeping your CIS records organised for audits or inspections.

  • Monitoring deadlines and reminding you of submission dates.

  • Appealing penalties and resolving HMRC disputes if needed.

With professional support, you can focus on running your construction business while staying fully compliant with HMRC requirements.

Final thoughts

Late CIS returns can lead to escalating penalties, even if you had no subcontractor payments to report. HMRC automatically issues fines starting at £100 per missed return, with higher charges for ongoing delays.

The best way to avoid penalties is to stay organised, use reliable accounting software, and submit your returns before the deadline. If you struggle to manage the process or have received penalties already, an accountant experienced in CIS can help you get back on track and prevent further fines.

By staying compliant each month, you can protect your cash flow and maintain a good standing with HMRC.