Under the Construction Industry Scheme (CIS), contractors must submit a return to HMRC every month. Even if you have not paid any subcontractors, you are still required to file a nil return.
Miss the deadline, and HMRC will issue a penalty automatically.
This guide explains:
- When CIS returns are due
- How late filing penalties are calculated
- How they escalate over time
- How to appeal
- What counts as a reasonable excuse
- How to prevent repeat penalties
When are CIS returns due?
CIS returns must be submitted by the 19th of every month following the last tax month.
The CIS tax month runs from the 6th to the 5th of the following month.
For example:
- Payments made between 6 January and 5 February
- Return due by 19 February
Even if you did not pay any subcontractors during that period, you must still submit a nil return unless you have formally notified HMRC that no return is due.
What happens if you file late?
Late filing penalties under CIS are automatic. They are generated by HMRC’s system once the deadline passes.
The penalty structure is clearly set out in HMRC guidance.
1 Day Late
- £100
2 Months Late
- Additional £200
6 Months Late
- Additional penalty of £300 or 5% of the CIS deductions shown on the return (whichever is higher)
12 Months Late
- Further £300 or 5% of the CIS deductions (whichever is higher)
If the return is more than 12 months late, and HMRC believes the failure was deliberate or concealed, penalties can rise to up to £3,000 or 100% of the CIS deductions, depending on the behaviour involved.
Because the penalties stack, a single missed return can quickly escalate.
And importantly, penalties are charged per return, not per business. If multiple months are missed, each return attracts its own penalty sequence.
What if you didn’t pay any subcontractors?
A common misunderstanding is that if no subcontractors were paid, no return is required.
That is incorrect.
- HMRC requires contractors to either:
- Submit a nil return, or
Notify HMRC in advance that no return is required (if eligible)
Failing to do either will still result in automatic late filing penalties.
Can you appeal a CIS late filing penalty?
Yes. Contractors have the right to appeal.
You must normally appeal within 30 days of the date on the penalty notice.
Appeals can be made:
- Through HMRC’s online CIS account using the Penalty Appeal Service (PAS)
- In writing, quoting your UTR and penalty reference
If HMRC rejects your appeal, you may:
- Request an internal review, or
- Appeal to the First-tier Tribunal
What counts as a ‘reasonable excuse’?
HMRC will not cancel a penalty simply because the return was forgotten.
A reasonable excuse generally means something unexpected and outside your control prevented you from filing on time.
Examples recognised in HMRC guidance include:
- Serious illness
- Bereavement
- Fire or flood
- HMRC system outages
- IT failures outside your control
Being busy, lacking funds, or relying on someone else to file are not usually accepted as reasonable excuses.
If you are appealing, you must explain:
- What happened
- Why it prevented you from filing
- Why the return was submitted as soon as possible afterward
Evidence strengthens your case.
Do you still have to file if you appeal?
Yes.
Appealing a penalty does not remove your obligation to submit the missing return.
If the return remains outstanding, further penalties can continue to accrue.
Submitting the return as soon as possible often reduces the risk of escalation.
How late filing interacts with other CIS risks
Late filing penalties are separate from other CIS penalties, such as:
- Incorrect returns
- Failure to verify subcontractors
- Incorrect deduction rates
However, persistent late filing may increase the likelihood of HMRC compliance checks.
Repeated non-compliance can also affect your standing with HMRC more broadly.
What about future compliance changes?
While late filing penalties themselves are clearly defined under CIS rules, contractors should be aware of other compliance developments that may increase scrutiny.
Right to Work Enforcement
Right to Work Checks are enforced by the Home Office, not HMRC. However, employment status issues uncovered during immigration enforcement can intersect with tax compliance reviews.
Civil penalties for illegal working can reach up to £60,000 per worker for repeat offences.
Although separate regimes, both right to work compliance and CIS compliance rely on strong onboarding and record keeping processes.
Making Tax Digital (MTD)
Making Tax Digital currently applies to VAT and is expanding to Income Tax Self Assessment in phases.
While CIS monthly returns are not yet part of the MTD regime, digital record-keeping expectations are increasing across all tax areas.
Poor digital processes can increase the risk of late submissions, including CIS returns.
Practical steps to avoid CIS late filing penalties
- Set recurring calendar reminders for the 19th of each month.
- Submit nil returns promptly if no subcontractors were paid.
- Use HMRC’s online CIS system or authorised software.
- Check that payroll providers have actually submitted the return, ultimate responsibility remains with the contractor.
- Keep confirmation receipts of submission.
Late filing penalties are automated. Prevention is significantly easier than appeal.
Final thoughts
CIS late filing penalties are one of the most common issues contractors face and one of the easiest to trigger.
A single missed deadline creates an automatic £100 penalty. Leave it unresolved, and the amounts escalate quickly.
The key things contractors need to remember are:
- Returns are due by the 19th every month
- Nil returns are still required
- Penalties stack
- Appeals must be made within 30 days
- Filing late returns promptly limits further exposure
Understanding the timeline and acting quickly when something goes wrong is essential to managing risk under CIS.
Need help with a CIS penalty, or want to avoid the next one?
If you’ve received a CIS late filing penalty and aren’t sure whether you should appeal, or you’d simply rather not be worrying about monthly deadlines in the first place, speak to Hudson Contract.
We help construction contractors:
- Review and prepare CIS penalty appeals
- Put compliant monthly return processes in place
- Reduce the risk of repeat penalties
- Stay on top of wider CIS and compliance obligations
CIS penalties are stressful, but they’re also preventable with the right systems and support.
Get in touch to discuss how we can help you resolve existing penalties and strengthen your CIS compliance going forward.