CIS fines: wrong stamps may hit contractors for £2m a month

Contractors could be clocking up £2m-a-month in CIS fines because they are using the wrong postage stamps on returns to the tax man.

The revelations came after HM Revenue & Customs carried out a check of postal dates against arrival times instigated by the Construction Confederation.

The Confederation requested the review after repeated complaints from its members that they were still being fined for late returns - despite posting them on time.

HMRC discovered more than half of late returns had been sent with the wrong stamps on - often because contractors had sent returns in a large envelope but had not used a "large first-class stamp".

The most common mistakes were to use a single ordinary first-class stamp or two second-class instead. Rules on postal charges changed to reflect the size of a letter in August 2006.

Liz Bridge, director of tax at the Confederation, said: "We've been complaining that a lot of people who claimed to have posted in good time were told they had late returns.

"The HMRC couldn't find any evidence of delays within the post office except that there were people still having problems putting a first-class large stamp on a large envelope."

Bridge advised contractors either to file on line to buy the correct stamps, which cost 48p or to double up ordinary first-class stamps.

In November 2007, HMRC issued 41,000 penalties. Contractors face fines of £100 for every late monthly return.