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Nil returns were reinstated for mainstream contractors. If you paid no subcontractors in a tax month you must either file a nil return or notify HMRC of inactivity by the 19th. Doing neither is a missed return.
CIS late-filing penalties are charged per return, not per amount of tax. A nil month has no tax attached to it at all, so a run of unfiled nil months produces a bill with nothing underneath it. A return more than twelve months late can attract £3,000, or 100% of the deductions on it, whichever is higher — and on a nil return the deductions figure is zero, so it is the fixed amount that applies.
They are not the same thing. A nil return says "this month, nothing". An inactivity notification tells HMRC you expect not to pay subcontractors for a period, which suppresses the monthly filing requirement for up to six months. The notification runs out. If you are still inactive after it expires and have not renewed it, the returns become due again and nothing will tell you.
For a business whose subcontractor use is seasonal, the safer pattern is usually to file nil returns every month rather than to rely on an inactivity period that has to be renewed.
This question is part of CIS returns and verification, which covers the whole area.
Send us three months of payment and deduction statements. We will tell you what is wrong, what it is costing, and whether gross payment status would fix it.