In many cases, the new penalties will be less than what would be charged now. In particular, for new CIS contractors, there will be an upper limit to some of the penalties that are charged. This upper limit will apply when new contractors first send a monthly return, if that return and any other monthly returns that are sent at the same time, are late.
Although the new penalties do not start until October 2011, HMRC has published guidance explaining how the rules may apply early at the taxpayer's request. Any contractor who has been, or is, charged penalties for filing a monthly return late before October 2011, may ask HMRC to:
- work out how much the penalties would be under the new rules, and, if less than the amount already charged
- agree that their penalties should be reduced to the lesser amount
