Contractors face fines for lack of CIS compliance

Contractors could be hit with thousands of unwarranted tax fines when a six-month CIS amnesty comes to an end next month.

HMRC will penalise companies for failing to comply with new CIS legislation after 19 October, but industry experts are warning that HMRC's admin systems still cannot cope with the volume of tax returns, which will lead to firms being wrongly fined.

Tax expert Carolyn Walsh at consultant Insite 123 expects HMRC to be inundated with appeals from outraged contractors.

She said: "Most firms are still keying in their subbies' details in the traditional way and submitting them to the Revenue. HMRC wasn't expecting so many people to carry on with those methods and they haven't got the staff to cope with inputting all the data."

An HMRC spokesman insisted its reminders to contractors would result in "high levels of compliance".