Since 6 April 2026, the Construction Industry Scheme (CIS) introduced three major compliance changes for contractors and accountants.
- HMRC reinstated strict penalties for late CIS returns, starting at £100 and compounding over time.
- Contractors must legally submit formal nil returns during months with no subcontractor payments.
- HMRC has gained immediate powers to revoke Gross Payment Status (GPS) if they suspect fraud, without waiting for a formal investigation.
To manage these new risks, forward-thinking firms use software like BrightCIS by Bright to automate subcontractor verification, ensure timely nil returns, and avoid costly HMRC fines.
What are the new penalties for late CIS returns from April 2026?
If you miss a return, you face an immediate £100 fixed fine. If the return is six months late, the fine jumps to £300 or 5% of the CIS liability, whichever is higher. At twelve months late, penalties increase further based on the total tax owed and whether HMRC views the delay as a deliberate action.
These fines apply per contractor, per return period. If you miss multiple months, the costs compound rapidly. The penalty clock starts ticking the exact moment you miss the submission deadline. HMRC will not wait to contact you before applying the fine. Accountants must ensure clients hit every deadline without fail.
Do contractors need to submit a nil CIS return if no payments were made?
Yes. In the past, many contractors assumed they did not need to file a return if they did not pay any subcontractors during that month. This has changed entirely since April 2026.
Contractors must now submit a formal nil return for any tax month without subcontractor activity. This document proves to HMRC that the business is still active within the scheme but simply had zero payments to report. If you fail to submit this nil return, you face the exact same severe penalties as a standard missed return.
This significantly impacts contractors with seasonal projects or gaps between jobs. Accountants must now implement a strict monthly submission routine for all CIS clients, regardless of their trading activity.
How do the new HMRC anti-fraud measures affect Gross Payment Status?
Previously, HMRC had to conduct a lengthy, formal investigation before removing a contractor’s Gross Payment Status (GPS).
Now, HMRC can revoke GPS instantly if they suspect a business made or received payments linked to deliberate tax evasion. They can act first and investigate later. Furthermore, HMRC can charge the business for the lost tax and add a 30% penalty on top.
Crucially, this applies if you “knew or should have known” about the fraud. Even if a contractor was not the main offender, receiving tainted payments puts their GPS at immediate risk. Losing GPS damages cash flow and heavily strains commercial relationships.
What should accountants do to prepare clients for the April 2026 CIS rules?
First, check subcontractor verification processes. You must verify every subcontractor through HMRC before paying them. If a subcontractor is unverified, you must deduct a default 30% rate. Failing to verify properly now triggers HMRC’s new anti-fraud powers.
Second, establish a watertight monthly return schedule. Ensure nil returns are filed by the 19th of the following month. Treat Gross Payment Status as a critical asset requiring constant protection.
Ensure clients provide accurate deduction statements to subcontractors within 14 days of the tax month ending. Using BrightCIS by Bright streamlines this entire workflow. It handles verification, statement generation, and nil returns in one place, protecting your clients from unnecessary compliance failures.
How does the public body exemption change CIS calculations?
Since April 2026, payments made to local authorities and specific public bodies are completely exempt from CIS deductions.
Contractors dealing with these entities must update their internal systems. You should exclude these specific public sector payments from your standard CIS calculations moving forward. However, remember that this exemption only applies to the payments themselves. It does not alter your other monthly CIS reporting duties.
How does BrightCIS by Bright compare to alternative CIS software?
When looking at how BrightCIS by Bright compares to traditional tools like Moneysoft or standard HMRC online portals, the automation of compliance stands out. Basic portals require manual checking and do not proactively warn you about missing nil returns. BrightCIS by Bright automatically verifies subcontractors directly with HMRC and flags exactly when a nil return is due. While generic bookkeeping tools offer basic CIS add-ons, BrightCIS provides a dedicated, end-to-end workflow specifically designed to prevent these new harsh penalties.
