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Since the CIS scheme changed in 2008, HM Revenue & Customs have been experiencing difficulties in obtaining completed monthly returns from Contractors. Initially the number of returns received was less than 60% of the number expected. This has improved gradually and now in excess of 90% are being filed on time. HMRC are now raising penalty notices in respect of monthly returns that have not been filed and these penalty notices are fixed not time related. |
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A contractor who has received returns, but has not been using sub contractors so did not realise he should have been filing NIL tax returns now faces penalty notices totalling £5,200 for the year.
Due to those monthly returns have been filed late, HMRC are behind in sending details of sub-contractors earnings to their tax districts. This means that accountants have no way of checking a sub-contractors income other than his/her own books and records. Unfortunately, it is quite common to find that a sub-contractor has written a materials order on the back of a pay notification and the records are incomplete.
HM Revenue and Customs' instruction for dealing with this problem is to notify them in the white space on the tax return that estimates have been used in making the return. This highlights a potential problem in the cases like this in that the new taxation penalty regimes being introduced imposes a 30% penalty on the tax due if a person has been careless in preparing his return. Failing to keep books and records is defined as careless and likely to generate this minimum penalty.
Your local TaxAssist Accountant can help you get your affairs in order before these penalties come into force, so call us now on 0800 0523 555 or complete our contact form here.
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