Construction tax penalties skyrocket

Contractors who failed to file on time in accordance with the new industry
tax scheme are receiving penalties amounting to as much as £9m.

The higher than expected level of penalties shows the scheme is still
misunderstood in the industry, and that HM Revenue & Customs is cracking
down hard on late filers. The scheme was introduced in October.

The new figure for penalties may comprise the same people being penalised
again on top of the previous month’s penalties. HMRC had earlier issued a
warning that six out of ten contractors were not up to speed with the system. On
the basis of so many returns being late, £5m in penalties would have been due.

But the latest figures from the taxman reveal that contractors have continued
to file returns late, with 86,000 monthly returns now overdue. At £100 per
return, penalties of £9m are now being imposed.

‘The number of penalties suggests that some businesses do not understand the
ramifications of non-compliance and no doubt reflects some glitches in the
system,’ said KPMG senior manager Anne-Marie Robinson.

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