CIS Administration & Penalties
Time consuming and rigid reporting requirements
Significant costs to errors or omissions
Major disruption to your business from the loss of Gross Payment Status
The risks in detail
Managing your business’s CIS compliance with HMRC reporting can be complex and time consuming. Below are the key risks that relate to CIS Administration that could impact your operations.
The Burden of CIS Administration
Your responsibilities are to:
- Verify each sub-contractor with HMRC before you pay them
- Calculate and deduct CIS tax in accordance with the verification details
- Inform the sub-contractor the amount that they will be paid
- Submit electronically your CIS300 report by the 17th of each month, detailing all payments made to, and deductions collected from sub-contractors
- You must submit a "nil return" even if no sub-contractors are paid
- Provide a payment statement to the sub-contractor at least monthly
The Risk of CIS Penalties
The current penalties for failure include:
- Failure to submit monthly return (including a nil return) by the correct date: £100
- Monthly return still outstanding after 2 months: an additional £200
- Monthly return outstanding after 6 months: additional £300 or 5% of the CIS deductions (whichever is higher), with additional increases at 6 and 12 months
- HMRC will charge a ‘higher’ penalty if they find you deliberately withheld information — up to 100% of any liability, with minimums of £1,500 or £3,000
Four or more late contractor returns will trigger an automatic “ad hoc” HMRC review irrespective of when the next scheduled review is due to take place.
Loss of Gross Payment Status
The loss of Gross Payment Status can have a crippling effect on a company’s cashflow and result in:
- Up to 20% of a company’s earnings being held by HMRC
- Deductions held until the following financial year
- A significant drop in your credit rating
- A loss of company’s credibility and ability to trade
A business will fail the scheduled review if:
- Any contractor returns have been late on four or more occasions
- Any one contractor return is over 28 days late
- Any PAYE or CIS payments have been late on four or more occasions
- Any one PAYE or CIS payment is more than 14 days late
- Any self-assessment payment is more than 28 days late
- Any Corporation Tax payment is more than 28 days late, or is outstanding at the date of the review
- Any self-assessment return is outstanding at the time of the review
- Any payment of £100 or more due to HMRC is outstanding at the time of the review
What is the solution?
Engaging EEBS for CIS administration will greatly simplify your processes. Once verified with HMRC, EEBS takes responsibility for sub-contractors, which means you no longer need to report them on your CIS300. This saves you time, reduces paperwork, minimises CIS compliance responsibilities, and decreases the risk of errors and associated costs/penalties.
EEBS will remove the CIS administration burden by:
Managing the sub-contractors CIS tax
Inform the sub-contractor of the amount that they will be paid
Include all engaged sub-contractors on our own status submissions to the Revenue
Provide the sub-contractor with both a payment statement for each time they are paid, plus an annual CIS deduction statement
Other Benefits
EEBS prevent HMRC reclassifying self-employed sub-contractors as employees. By engaging EEBS for the supply of your sub-contract labour, we create an unbreachable firewall, protecting you from costly NI bills, and fines.
Protection from Employment Rights Claims: By engaging EEBS, your business is shielded from potential employment rights claims such as holiday pay, pension contributions, unfair dismissal, discrimination, and parental rights.
By outsourcing your CIS sub-contractor payroll arrangements, you can focus more on your core business activities while minimising administrative burdens and potential liabilities.
“We have been working with EEBS for nearly a year now. We have found them to be extremely professional & the service they provide exceptional.”
Christine Shearing, Kenwood Groundworks
“We have used EEBS for 7 years now and we cannot fault their service. They keep us up to date with new legislation and regularly carry out compliance reviews. Their staff are friendly and knowledgeable and the processing rates are fair.”
Google Review
“Superb service from EEBS. They handle all our HMRC verification, CIS tax is always calculated correctly, and wages are always paid on time. Couldn’t recommend them highly enough.”
J&J Windows & Doors
