From 6 April 2026, mainstream construction contractors can no longer leave a CIS reporting month unanswered simply because no subcontractors were paid. The contractor must normally file a nil return or notify HMRC in advance that no payments will be made for the relevant period.
The change makes monthly bookkeeping and CIS review more important. A quiet month may produce no CIS deductions to pay, but it can still create a filing obligation and penalties if the business takes no action.
What changed from April 2026
The legal requirement to submit CIS nil returns was removed in 2015. HMRC found that removing it did not deliver the expected administrative benefit and contributed to incorrect penalty notices and avoidable disputes. The Income Tax Construction Industry Scheme Amendment Regulations 2026 therefore restored the requirement from 6 April 2026.
A nil return confirms that no reportable payments were made to subcontractors during a CIS tax month. It is not a report of zero deductions. If a subcontractor was paid under gross payment status, the payment must still appear on the normal monthly return even though no tax was withheld.
Who must file a nil return
The statutory rule applies to mainstream contractors whose business includes construction operations and who have previously made contract payments. This commonly includes building firms, construction companies, property developers carrying on construction activities, and businesses that operate as both contractors and subcontractors. Understanding Construction Worker Status is also important when determining whether individuals should be treated as employees or self-employed subcontractors under CIS.
Deemed contractors require more careful treatment. HMRC guidance distinguishes them from mainstream contractors and says they are not legally required to file a nil return, although they should tell HMRC when no return is due to prevent or cancel a system generated penalty. A business that has stopped using subcontractors altogether should not assume its CIS obligations have ended automatically. Its normal working arrangements and future expectation of making construction contract payments must be considered, and HMRC should be informed where appropriate.
What must be filed each month
Every CIS tax month runs from the 6th of one calendar month to the 5th of the next. The contractor should establish which of the following applies:
- Subcontractors were paid, so a normal CIS monthly return is required.
- No subcontractors were paid, so a nil return is required.
- No subcontractor payments are expected and HMRC was notified within the advance notification rules, so no nil return is required for the notified period.
The test is based on payments, not merely invoices received, work completed, or amounts accrued in the accounts. CIS payments can include cash, cheques, credits, advances and other amounts paid under a construction contract.
Filing deadline
A nil return must reach HMRC no later than 14 days after the end of the tax month. In practical terms, the deadline is the 19th of the following calendar month.
For example, the first period affected by the restored rule ran from 6 April to 5 May 2026, with the nil return due by 19 May 2026. Contractors can file through the HMRC CIS online service or compatible commercial CIS software.
A nil return creates no CIS deduction payment. However, where a normal return includes deductions, the payment obligation remains separate from the return filing requirement.
Using an inactivity request
An inactivity request can reduce repetitive administration where the contractor knows that no subcontractors will be paid for several months. The legislation requires the notification to be made no later than 14 days before the start of the relevant tax month.
HMRC can set a temporary inactivity period for up to six months, during which nil returns are not required. The period may be extended, but if the contractor starts paying subcontractors again, HMRC should be told immediately and monthly reporting must resume.
This option should be used only when the payment forecast is reliable. If the business cannot predict whether subcontractors will be paid, monthly review and nil filing will usually be safer than relying on an inactivity request.
Penalties for late filing
A missing nil return can enter the same CIS late filing penalty regime as a return containing subcontractor payments. The initial fixed penalty is £100 when the return is one day late. A further £200 fixed penalty applies if it remains outstanding two months after the penalty date.
At six months, the penalty is the greater of £300 and 5 percent of the CIS liability that should have appeared on the return. At twelve months, another penalty applies. The minimum is generally £300 where the failure was not deliberate, but deliberate behaviour can produce minimum penalties of £1,500 or £3,000 depending on whether information was concealed.
Because a nil return has no tax liability, the fixed minimum amounts remain relevant. Contractors should therefore not treat a zero payment month as a zero risk month.
Accounting controls to introduce
A reliable process should begin after every tax month closes on the 5th. The accounts team should reconcile the subcontractor ledger to bank payments, credit entries, payment records and CIS verification data before deciding whether the month is nil.
Responsibility should be assigned to a named person, with an internal review date before the 19th. The business should retain the filing receipt, supporting reconciliation and any inactivity confirmation with its CIS records. The same review should also identify subcontractor payments made gross, because those payments remain reportable.
Contractors should keep CIS separate from, but reconciled with, PAYE and the VAT reverse charge. CIS registration does not by itself prove that a worker is self employed, and the monthly return includes a declaration concerning employment status. Accurate classification protects the contractor from payroll, National Insurance and reporting errors beyond the nil return itself.
What to do after a missed return
File the outstanding nil return as soon as possible rather than waiting for a penalty notice. If HMRC has issued a penalty incorrectly, or exceptional circumstances prevented filing, an appeal can usually be made within 30 days of the notice.
HMRC may accept a reasonable excuse where an event such as serious illness, bereavement, unexpected system failure, fire or flood prevented compliance, provided the return is filed without unreasonable delay after the problem ends. Not receiving a reminder or simply finding the online service difficult will not normally be accepted.
How Construction Tax Accountants Can Help
Construction Tax Accountants can review each monthly payment cycle, reconcile the subcontractor ledger and prepare the correct CIS submission before the deadline. Our CIS Registration and Compliance service supports registration, verification, monthly returns, record keeping and HMRC correspondence. Where worker classification or payroll treatment needs attention, our Construction Payroll and PAYE service helps keep employees and genuine subcontractors correctly separated and reconciled. We can also review connected tax areas through our VAT Domestic Reverse Charge Advisory and Construction Year End Accounts services, helping ensure that CIS records agree with VAT returns, payroll reports, statutory accounts and Corporation Tax calculations.
Frequently asked questions
Do subcontractors file CIS nil returns?
No. The monthly nil return is a contractor obligation. A subcontractor may have separate Self Assessment, Corporation Tax, VAT or payroll responsibilities, but does not file a contractor nil return merely because no CIS income was received.
Can one inactivity request cover several months?
Yes. HMRC can record temporary inactivity for up to six months, and the period may be extended. The notification must be made in advance, and reporting must restart if subcontractor payments resume.
Is a return nil when subcontractors were paid gross?
No. Gross payment status means no CIS deduction is withheld, but the payment is still reported. A nil return is appropriate only where no reportable subcontractor payments were made in the tax month.
