There is now a definite requirement for CIS contractors to submit a nil return to HMRC where no contractor payments are made in a tax month.
With gaps between projects, seasonal work, and periods of inactivity, there are likely to be months when this should be done.
This approach started in April 2026, but it is worth highlighting, as HMRC has reinstated the full CIS late filing penalty regime. Contractors need to ensure every tax month is covered either by:
- submitting a CIS return (nil or otherwise), or
- notifying HMRC of a period of inactivity.
Late filing penalties
- £100 fixed penalty
- £200 fixed penalty after two months
- A tax geared penalty at 6 months of a minimum of £300 or 5% of any liability which should have been shown on the return
- A further tax-geared penalty at 12 months with the amount depending on why the return was late.
What is the Construction Industry Scheme (CIS)?
CIS is a tax deduction scheme that applies to payments made by contractors to subcontractors carrying out construction work in the UK.
– the contractor must withhold tax and pay it directly to HMRC
– the withholding rate is 20% for registered subcontractors and 30% for unregistered subcontractors.
The rules apply to UK businesses and overseas organisations undertaking construction projects in the UK.
Further information
Your business may benefit from extra support. We’re here to help with specific queries. Our team can assess your situation, and then follow up with a way forward. More on tax, audit and advisory services here.
See also Construction Industry Scheme (CIS) enhanced anti-fraud measures