Penalties for filing late CIS contractor monthly returns are changing from October 2011.

In many (but not all) cases, the new penalties will be less than what would be charged now. In particular, for new CIS contractors, there will be an upper limit to some of the penalties that are charged. This upper limit will apply when new contractors first submit a monthly return, if that return and any other monthly returns that are sent at the same time, are late.

Although the new penalties do not start until October 2011, any contractor who has been, or is, charged penalties for filing a monthly return late before October 2011, may ask HMRC to:

• work out how much the penalties would be under the new rules, and, if less than the amount already charged
• agree that their penalties should be reduced to the lesser amount

The penalty under the new rules will not be lower in every case.

The minimum penalty for each late monthly return will remain £100. However the penalty may still exceed any liabilities shown on the return.

But, the penalty under the new rules may be lower if:

• more than one penalty has been charged in respect of any one monthly return; or
• more than £100 has been charged in respect of any one monthly return; or
• the case involves a new contractor who has been charged penalties for more than one late monthly return

For more information go to http://www.hmrc.gov.uk/cis/penalties-late-returns.htm