What if your CIS contractors have missed the Self-Assessment deadline?

self-assessment

The end of January has come and gone, and with it the deadline for submitting self-assessment tax returns and paying any tax owed. If you’re a recruiter supporting CIS contractors, you might find yourself fielding urgent questions from panicked workers who have missed the deadline. If you are in this position, here’s what you need to know.

Who has to complete a self-assessment tax return?

When workers register for CIS, they also need to register with HMRC as self-employed and having registered they will then be expected to complete a self-assessment tax return for that tax year. If your CIS contractors were registered in the tax year ending April 2019, they will need to submit a self-assessment tax return, and the deadline passed on 31st of January 2020.

If you have new CIS contractors who will need to submit a return for this tax year, they will need to register as self-employed by 5th October 2020.

What are the implications of missing the deadline?

If your contractors have missed the deadline for filing their self-assessment tax return, they will usually be fined unless they have what HMRC consider to be a “reasonable excuse”. Fines will still apply, even if they don’t owe any tax. Standard fines for late filing are:

  • Up to 1 day late- £100
  • Up to 3 months late – an additional £10 per day, up to a maximum of £900
  • 6 months late – an additional £300, or 5% of the tax owed, whichever is greater
  • 12 months late – another additional £300, or 5% of the tax owed, whichever is greater

If your contractors owe tax to HMRC, there may be penalties for late payment too:

  • 5% of unpaid tax after 30 days
  • Another 5% of unpaid tax after 6 months
  • Another 5% of unpaid tax after 12 months.

The good news is that most of your CIS contractors will be due a refund, because a flat 20% will have been deducted as they were paid throughout the year, so they’re unlikely to owe any tax.

What action should your CIS contractors take?

The quicker the issue is resolved, the less expensive it will be for your contractors, so their priority should be to submit their tax return as soon as possible. They can do this online from HMRC’s website.

If they can’t submit their return immediately, if they owe tax that they can’t pay right away, or if they have a reasonable excuse for late filing, they should contact HMRC as soon as possible. 

What constitutes a reasonable excuse?

HMRC take a narrow view of what counts as a reasonable excuse. Their guidance says the following may count:

  • Their partner of a close relative died shortly before the deadline
  • They had an unexpected stay in hospital that prevented them from submitting
  • They had a serious or life-threatening illness
  • Their computer or software filed just before or while they were preparing your return
  • Service issues with HMRC’s online services
  • A fire, flood or theft prevented them from completing their return
  • Postal delays that they could not have predicted
  • Delays related to a disability they have

If they relied on someone else to complete their return, found the HMRC system too difficult to use, or did not receive a reminder from HMRC, it will not be considered a reasonable excuse.

Where can they go for help with their Self-assessment tax return?

If your contractors are using Orange Genie’s CIS self-employed solution, they will have received information about their self-assessment tax return and our preferential rates for completing it for them. Whether they’re with us already or not, we’ll be happy to advise them.

If you have questions or if we can help in any way, please call our expert team on 01296 468 483 or email info@orangegenie.com.  

 

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