![]() Note Capping will not apply to a contractor for any periods after the date that they have filed their first CIS monthly return (CIS300), similarly, the £300 minimum for the first and second tax geared penalties will apply for any period after the contractor has filed their first CIS monthly return.Ī CIS penalty will be capped where by virtue of its issue it will take the total CIS fixed penalties within the capping period to an amount in excess of £3000. The tax geared element of the penalty is therefore not subject to a minimum of £300, and the total CIS penalties become £3000 (capped) plus £1750 plus £250 equating to £5000. In addition as this is a new contractor the amount of each tax geared penalty is now less than £300 (CIS deductions, £5000 at 5% = £250) for each return. Once again the contractor is new and the capping period applies for the period until, so the first and second fixed penalties of £1300 and £2200 are therefore capped to £3000. Without capping the total CIS penalties charged under FA09/SCH55 would be as follows Fixed Penalties ![]() This is the same as example 1 above except that each return shows CIS deductions made of £5,000. ![]() Therefore instead of first and second fixed penalties of £1300 and £2200 being charged, these amounts will be capped to a maximum of £3000 and the total CIS penalties charged will be £7000 instead. ![]() However, as the contractor has never filed a CIS monthly return before, the contractor is new and the capping period applies for the period until, being the 5th of the month following filing of the first CIS monthly return. Without capping, the total CIS penalties charged under FA09/SCH55 would be as follows Fixed Penalties Each return shows CIS deductions made of £10,000. Example 1Ī contractor is due to file their first CIS monthly return on but fails to file their CIS returns for the months May 2012 to May 2013 until. The tax geared penalties are not included within the capping provisions and will be issued in addition to the capped fixed penalties (where circumstances apply) at 6 and 12 months. This means that the total of all the fixed CIS penalties applying during the capping period are subject to a cap, or maximum, of £3000.Ĭapping applies only to the fixed CIS penalties. Top of page How capping for new contractors worksĪll CIS fixed penalties for CIS monthly returns which have a filing date which fall within that capping period will then be subject to the cap. The capping end date though is not set on the CIS record until such time as the first CIS return that has been received has been logged or logged and captured, and will be set if the return status is any one of the following The capping period ends at the 5th of the month following the date the contractor filed their first CIS monthly return after 6th October 2011 (irrespective of what month that first CIS monthly return is filed for).įor contractors registered for CIS for the first time, the capping start date is set on the CIS record following registration. The capping period commences from the date that the contractor first had an obligation to file a CIS monthly return or 6th October 2011 (whichever date is the later). So, if the tax geared element of a penalty of 5% of any CIS deductions shown on the return, is less than the normal minimum of £300 for a tax geared penalty, then it is the lower amount of the penalty that will be charged in these circumstances. There is also a further provision within FA09/SCH55 applicable only to new contractors where the minimum penalty of £300 for the tax geared penalties does not apply for periods up to the date the contractor files their first CIS monthly return. If the contractor had previously been registered for CIS prior to 6th April 2007 and filed annual contractor returns (CIS36) up to 5th April 2007, they will still be treated as a new contractor provided that they have never filed a CIS monthly return (CIS300) before. New contractorsĬapping may apply to a new contractor and, in this context, a new contractor is one who has never previously filed a CIS monthly return (CIS300) before. Where capping applies the total of the first and second fixed penalties issued will not exceed £3000. Capping applies only to a new contractor, and this provision does not apply to any CIS penalties issued under TMA70/S98A(2)(a). Under FA09/SCH55 there is a facility known as capping of CIS fixed penalties, which applies only from 29th October 2011.
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