How to appeal a CIS penalty

How do I appeal a CIS penalty?

Online or in writing, within 30 days of the date on the penalty notice. Step by step:

1. Check the penalty notice. Note the date on it and the payment reference. Your 30 days to appeal start from the date on the notice.
2. Send the missing return. If it is still outstanding, file it now. An excuse only covers the time it lasted, and HMRC expects the return as soon as the problem is over.
3. Write down what happened, with dates. When the problem started, when it ended, and what you did about it. If a computer or HMRC system stopped you, note the date you tried to file and any error message.
4. Send your appeal. Appeal through HMRC’s online service, where you can also track it, or write to HMRC with your explanation, quoting your Unique Taxpayer Reference (UTR) and the payment reference on the notice. You cannot appeal over the phone.
5. Ask for a review if HMRC says no. Write to the same HMRC office to ask for a review, or take your appeal to the tax tribunal.

Missed the 30 days? You can still appeal, but you will need to explain why you are late too.

GOV.UK, CIS returns: You can appeal within 30 days of the date on the penalty notice. HMRC manual CISR81110: they must remedy that failure without unreasonable delay after the excuse ends.

A penalty comes from missing one of the monthly jobs. How CIS works lists them.

What counts as a reasonable excuse?

Something serious and outside your control that stopped you filing on time. HMRC’s own CIS manual gives these as examples:

• Your partner or a close relative died around the deadline.
• You had an unexpected stay in hospital.
• A fire, flood or theft stopped you doing the return.
• Your computer or software failed while you were doing the return.
• HMRC's online service would not accept your return.
• HMRC caused the delay.

Each case is still judged on its facts, so none of these is a guarantee.

Source: HMRC manual CISR81070, which adds: An excuse will not necessarily be accepted as reasonable just because it seems to fit into one of these categories.

What will HMRC not accept?

Most everyday reasons. The same manual says none of these is enough on its own:

• Your bookkeeper or accountant was supposed to file it.
• You were on site all month and there was nobody in the office.
• HMRC never reminded you.
• The month was a mess and the paperwork was not ready.
• You owed nothing that month anyway.
• The penalties add up to more than the deductions you were reporting.

Source: HMRC manual CISR81090, for example: the failure is due to reliance on a third party.

Can I appeal if my accountant forgot to file?

Not on that reason alone, and this is easy to get wrong because two HMRC pages say different things. GOV.UK’s general guidance counts it as a reasonable excuse if you relied on someone else to send your return, and they did not.

But for a CIS penalty, HMRC works from its CIS manual, and that says:

“They cannot claim they had a reasonable excuse merely because the task was delegated to a third party and the third party failed to complete it.”

What can work is showing you kept on top of them. The manual expects you to take reasonable care to explain to the third party what they require them to do, to set deadlines for the work and to make regular checks on progress.

In your appeal, say what you asked them to do, the deadline you gave them, and how you checked on progress.

What if I posted my return on time and it arrived late?

HMRC will usually accept that the first time. Its CIS manual tells staff that unless there is evidence to the contrary, you should accept the grounds of the first such appeal without further enquiry.

If it happens again within twelve months, they are told to ask the contractor to provide some form of evidence to back up the date of posting as claimed. So if you post your returns, keep a certificate of posting.

How much CIS penalties are and when they are charged