A CIS nil return is a CIS300 monthly return filed by a contractor for a tax month in which no payments were made to any subcontractor, confirming to HMRC that the contractor was active but paid nobody under CIS.
The nil-return obligation was removed in 2015 and reinstated from 6 April 2026. From that date, every contractor registered for the Construction Industry Scheme must either file a CIS300 nil return for each month with no subcontractor activity or pre-notify HMRC of inactivity for a period of up to six months in advance. Many contractors are unaware the obligation has returned, making it one of the most common sources of automatic penalties since April 2026.
The penalty ladder for a late nil return is identical to that for a substantive return: £100 for one day late, £200 at two months, £300 or 5% of the CIS liability (whichever is higher) at six months, and £300 or 100% of the CIS liability at twelve months. Because a nil return carries no CIS liability, the 5% and 100% floors do not apply, so the effective penalty for a nil return that is persistently missed escalates through £100, £200 and then two further charges of £300 each.
Filing a nil return typically takes a few minutes online through the HMRC CIS service. If a contractor knows they will have no subcontractor payments for an extended period, they can avoid repeated monthly filings by contacting HMRC to record a period of inactivity, which suspends the obligation for up to six months.
- Obligation: in force from 6 April 2026 (reinstated after eleven years).
- Alternative: pre-notify HMRC of inactivity for up to six months at a time.
- Penalty trigger: one day after the 19th of the following tax month.
- Base penalty: £100 per missed nil return.
For a full explanation of what triggers the obligation and how to avoid the penalties, see CIS nil return explained: the April 2026 rule every contractor must know. The wider penalty regime is covered in CIS penalties and appeals: the complete guide.