CIS late filing penalties

Each penalty is added to the ones before it. They apply to late CIS300s, nil returns included.

So once you have filed a CIS return before, a return 6 months late costs at least £600, even for a month when you paid no subbies and owed nothing.

If the return only covers subbies you pay gross and you held it back on purpose, the 12 month penalty is £1,500, or £3,000 if you also hid that you had done it.

Time, first of all. At 6 and 12 months the penalty is the higher of £300 and 5% of the deductions the return should have shown, so a month with big deductions costs more.

At 12 months, if HMRC finds you held back the return on purpose to keep it from working out what you owe, the second £300 or 5% becomes:

• 70% of the deductions, at least £1,500, if you held it back on purpose
• 100% of the deductions, at least £3,000, if you also hid that you had done it

Since 6 April 2026, HMRC can make you pay 20% of what you paid a subbie if, before you paid, you knew or should have known that someone on the job was deliberately not taking CIS deductions, not paying them to HMRC, or not running PAYE. That someone can be the subbie you paid, or anyone else with a contract for the same work, above you or below you.

On top of that, HMRC can charge a penalty of up to 30% of the amount it asks for. It is lower if you tell HMRC what happened and help early. If your business is a company, HMRC can make a director pay some or all of the penalty.

If you are paid gross yourself, HMRC can also cancel your gross payment status straight away. After a cancellation for this, you can't apply for gross payment again for 5 years.

It works the other way too. A subbie who claims CIS deductions on their tax return, knowing or when they should have known the deductions were never taken or deliberately not paid to HMRC, can be made to pay back everything they claimed, plus the same penalty.

HMRC's own guidance lists warning signs that can show you should have known, including:

• prices below what the labour could really cost
• being asked to pay a third party, or a bank account offshore
• no written contract on a big job
• invoices from different subbies on the same template
• new companies replacing ones that went missing, supplying the same workers

Check who you are paying before you pay them, and keep a note of what you checked and when.

If you have never filed a CIS return, the returns you missed before your first one, and that first return, are treated more gently. The £100 and £200 penalties on them are capped at £3,000 in total, and the £300 minimums at 6 and 12 months do not apply, so those penalties are just 5% of the deductions.

There is no penalty if you had a reasonable excuse for filing late and you file without unreasonable delay once the excuse has gone. Two things do not count on their own:

• not having the money, unless that came from events outside your control
• relying on someone else to file, unless you took reasonable care to make sure it was done

To appeal a penalty, you have 30 days from the date on the penalty notice.

From 6 April 2026, a construction business that has paid subbies before needs a nil return by the 19th for a month when it pays none, unless it told HMRC in advance. A late nil return gets the penalties above. See CIS nil returns for who needs one, and CIS deadlines for this tax year's dates.