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Tag: Fines

How to successfully appeal a CIS penalty fine (construction industry scheme)

_150372_tax_man_cartoon_300This month I’ve noticed a substantial increase in the number of people who are hitting our website searching for ways to avoid or otherwise appeal their automatic penalty notices received under the new Construction Industry Scheme. HMRC started charging penalties in October 2007 although our logs this month have recently shown a vast increase in the number of contractors who are searching Google for a way to appeal their penalties.

How to successfully prevent a CIS penalty

It’s astonishing that as an independent software vendor how many construction contractor companies prefer to contact us to ask for advice on the new Construction Industry Scheme. The hottest topic at the moment are the CIS penalties that a lot of businesses are receiving for non-compliance with the new scheme, it’s rules and it’s deadlines.

CIS penalties have been rolling for five months now, three of which we already have the statistics for. The numbers are terrifying, a total of 118,458 penalty notices were issued in a three month period from October to December. Assuming that these three months are representative, that’s a minimum of £47 million a year in fines, paid for by construction businesses like yours.

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UK construction companies expected to pay £47 million in late filing penalties

A recent article AccountingWeb reveals some rather interesting statistics on the CIS penalties for late monthly returns that UK Construction Companies have racked up since last October:

Rebecca Benneyworth writes:

The number of penalty notices issued for late CIS monthly returns are shown as:

  • October 2007: 35,919 (> £3.5M)
  • November 2007: 44,921 (> £4.4M)
  • December 2007: 37,618 (> £3.7M)

She adds, “So a total of 118,458 notices were issued in a three month period, bringing in fines of at least £11.8 million (as the minimum penalty is £100). Assuming that these three months are representative of a normal quarter, this would bring an annual yield from penalties for the new CIS 300 to over £47 million.”

Source: AccountingWeb / Hansard

Although we don’t know how many of these automatic penalties were issued in error (and hence would be invalidated under an appeal), we do know that the standard fine is £100, and the serious fine as high as £3,000 per subcontractor per month, which suggests a yield from just the monthly return of £47 million per year.