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Insight · Tax and CIS

CIS monthly returns,
the date and the penalties.

The nineteenth, every month, whether or not you paid anybody. What the penalty ladder actually looks like, and the declaration on the return that carries more weight than the figures.

Published ·Updated ·5 min read·Written by

Two people working through a drawing at a desk with laptops

A contractor's CIS return is due by the nineteenth of each month, covering the tax month ending on the fifth. It is due whether or not you paid any subcontractors, unless you have told HMRC you are inactive. The penalty is £100 the day after, rising through the ladder below, and it applies per return.

When is the CIS monthly return due?

The tax month runs from the sixth of one month to the fifth of the next. The return covering it is due by the nineteenth.

Separately, the deductions themselves have to reach HMRC by the twenty-second where you pay electronically, or the nineteenth if you pay by post. Two obligations, filing and paying, on nearly the same date, and it is worth being clear that they are separate: filing on time and paying late attracts a different consequence from not filing at all.

What is the penalty for a late CIS return?

Automatic, and steeper than most firms expect because it applies to each return rather than to the situation.

CIS monthly return: the late filing penalty ladder, per return
How latePenaltyRunning total
One day£100. The same whether the return is a day late or three weeks late, and the same whether it was a nil return or one with fifty subcontractors on it.£100
Two monthsA further £200.£300
Twelve monthsThe higher of 5% of the CIS deductions shown on the return, or £300, with a further charge of the same kind where the delay runs longer.£600 at least, and more wherever 5% of the deductions exceeds £300

The multiplication is the part that hurts. A contractor who stopped filing eight months ago has not one penalty but eight, each on its own ladder. Firms that discover this generally discover it as a five-figure number arriving at once.

The penalty is per return, not per contractor. Eight missed months is eight ladders running in parallel, not one.

Penalties can be appealed where there is a reasonable excuse, and HMRC has in the past reduced penalties in some circumstances for contractors filing a long backlog. Neither is something to plan around. Filing late deliberately because the penalty seems affordable is the reasoning that produces the five-figure letter.

The nil return, and going inactive

This is where most accidental exposure comes from, and it is entirely avoidable.

If you are registered as a contractor and paid no subcontractors in a month, the return is still due. It is a nil return, and not filing it attracts the same £100 as any other. Firms that use subcontractors seasonally, or that had one package last spring and nothing since, accumulate penalties for months of doing nothing at all.

The fix is straightforward. If you do not expect to pay subcontractors for a while, tell HMRC the scheme is inactive, and returns stop falling due for that period. It can be requested for a limited number of months at a time, so it is a thing to renew rather than set once, and you must start filing again as soon as you make a payment.

Between the nil return and the inactivity request, almost all penalty exposure for firms who are not actually trading as contractors disappears. Very few firms use either.

The declaration nobody reads

Worth its own section because it is signed every month and carries consequences well beyond a filing penalty.

The return includes a declaration that none of the contracts covered by it are contracts of employment, and that the employment status of each subcontractor has been considered. That is not a formality. It is a monthly statement to HMRC about how you have characterised the people working for you.

A firm paying somebody through CIS who on the facts looks like an employee, week after week, on your tools, under your direction, with no other clients, has been making that declaration every month. If the status is later challenged, the declarations are part of the picture. Whoever files the return should know what they are declaring, and if the answer is uncertain for anybody on it, that is a conversation with your accountant rather than a box to tick.

What goes on it

For each subcontractor paid in the month: their name and verification details, the total payments made excluding VAT, the cost of materials where you have deducted from labour only, and the deduction taken. Then the declarations, then submit.

Two recurring sources of error. Deducting from the whole invoice rather than the labour element, which over-deducts and is the commonest CIS mistake there is. And paying a subcontractor at 20% rather than 30% without having checked their CIS status with HMRC first, which is the contractor's problem to correct rather than the subcontractor's. Both are covered in the CIS deductions guide, and the arithmetic is in the CIS deduction calculator.

This is tax, and your own circumstances may differ from the general position above. Settle anything unusual with your accountant.

Where this touches the platform

The return itself goes through your payroll or accounts package, which stays. Unibuild holds the material the return is built from: every payment recorded against the approved invoice with its date, amount and the remittance or receipt attached, each producing its own A4 payment certificate on the classic subcontract certificate layout, and a subcontract exposure report totalling orders, invoices and payments across the ledger. That is the difference between assembling the month's figures and looking them up.

The CIS deductions guide Subcontractor management Financial and invoicing CIS deduction calculator

Where to start, on Monday

Two questions. Is every return for the last twelve months filed, including the months you paid nobody. And if you are not currently using subcontractors, has anybody told HMRC the scheme is inactive.

If the answer to the first is no, file the outstanding ones now rather than later, because each additional month is another rung on another ladder. If the answer to the second is no and you have no subcontractor payments in prospect, that is a five minute job that stops the meter.

Sources

Checked against the source rather than against commentary. Where a schedule, a rate or a threshold is definitive on a government site, read it there.

Asked most often

The follow-up questions.

Getting the deductions back is in reclaiming CIS deductions.

When is the CIS monthly return due?
By the nineteenth of each month, covering the tax month that ended on the fifth. Separately, the deductions themselves must reach HMRC by the twenty-second if paying electronically or the nineteenth by post. Filing and paying are two different obligations falling on nearly the same date.
What is the penalty for a late CIS return?
£100 as soon as it is a day late, a further £200 once it is two months late, and at twelve months the higher of 5% of the CIS deductions on that return or £300, with a further such charge for longer delays. Penalties apply per return, so a contractor eight months behind has eight separate ladders running rather than one.
When do the CIS deductions have to be paid to HMRC?
By the twenty-second of the month following the tax month if you pay electronically, or the nineteenth by post, in line with the PAYE deadlines. The return and the payment are two separate obligations with two separate consequences, and filing on time while paying late still attracts interest and can affect gross payment status. Firms that treat the return as the deadline and the payment as a follow-up are the ones that find this out.
What information goes on the CIS return?
For each subcontractor paid in the month: name and verification details, total payments excluding VAT, the cost of materials where you have deducted from labour only, and the deduction taken. The two recurring errors are deducting from the whole invoice rather than the labour element, and paying an unverified subcontractor at 20% instead of 30%.
What does a CIS monthly return actually contain?
For each subcontractor paid in the tax month: their name, verification details, the total payments made excluding VAT, the cost of materials, and the amount deducted. Alongside that sits the contractor's declaration about employment status and verification. Nil returns are a separate case. The figure people most often get wrong is materials, because it is the one that reduces the amount deducted and has to be evidenced.
What does "total payments made" mean on the CIS return?
It is the gross amount paid to the subcontractor for the work, before any deduction, and before you take off the cost of materials. The return then asks separately for the cost of materials and for the amount deducted, so the three figures reconcile: total payments, less materials, gives the amount the deduction was calculated on. The two errors that cause most corrections are entering the net figure that actually left the bank, and including VAT. Both are wrong: the box wants the gross payment for the work, excluding VAT, with materials shown in their own box rather than removed from this one.
What am I declaring when I submit a CIS return?
Among other things, that none of the contracts covered are contracts of employment and that the employment status of each subcontractor has been considered. That is a monthly statement to HMRC about how you have characterised the people working for you, and it carries consequences well beyond a filing penalty if a status is later challenged. Whoever files should know what they are declaring.
Do I need to file a CIS return if I paid no subcontractors?
Yes, as a nil return, and not filing it attracts the same £100 penalty as any other. This is where most accidental penalty exposure comes from: firms that use subcontractors seasonally accumulate penalties for months in which they did nothing. The alternative is telling HMRC the scheme is inactive, which stops returns falling due for that period.
Do I still file a return if every subcontractor has gross status?
Yes. Payments to gross-status subcontractors are still reportable, even though nothing was deducted from them. This is a common and expensive misunderstanding, because it feels as though a month with no deductions is a month with nothing to report. The return records payments made under the scheme, not deductions taken. A month with payments and no deductions is still a full return.
How do I stop CIS returns being due when I have no subcontractors?
Tell HMRC the scheme is inactive. Returns then stop falling due for that period. It is granted for a limited number of months at a time so it needs renewing rather than setting once, and you must start filing again as soon as you make a subcontractor payment. Very few contractors use it, and it removes most accidental exposure.
What should I do if a CIS return is already late?
File it immediately, because the penalty structure escalates with the delay rather than with the amount. The first fixed penalty applies as soon as the deadline passes, with further penalties at two months, six months and twelve months. Filing late and filing much later are different sizes of problem. If the return was late for a reason HMRC accepts, file first and appeal afterwards.
Can a CIS return be amended after it has been submitted?
Yes. Amend the return for the month in question rather than correcting it in a later one, because the deduction has to sit in the period it belonged to. Netting an error off next month keeps your ledger tidy and leaves both returns wrong at HMRC. Where the error changed what a subcontractor was deducted, they need a corrected payment and deduction statement too, since they are relying on it for their own claim.
Next step

Look the month up, do not assemble it.

The return itself is not hard. Finding every payment, deduction and verification for the month before the nineteenth is the part that takes the evening.

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