Starting on April 6, 2026, the rules for the Construction Industry Scheme (CIS) are changing. The tax office (HMRC) is bringing back an old rule that will catch a lot of busy builders by surprise.
If your construction business goes a full month without paying any subcontractors, you must tell HMRC. This update is called a “nil return.” The government stopped asking for these back in 2015 to make things easier. Now, they are making them mandatory again. For more details on why, you can read the government consultation on CIS administrative changes.
The Penalty Trap
This new rule is dangerous if you track your projects with messy spreadsheets. If a tax month ends and you have zero subcontractor payments, you might think you do not need to do anything. But you only have 14 days to file your mandatory nil return.
If you miss that short 14-day window, HMRC’s computers will automatically fine you. Because the system is automated, you cannot argue with the computer or appeal the fine. If your team is busy and forgets, your business will lose money to these default penalties.
Why Teams Miss the Deadline
It is very easy to lose track of who is billing what when your finance team and your project managers are not looking at the same information.
Sharon Brown, a Financial Controller for a growing company, explains the danger of relying on manual tracking:
"There was a disconnect between our understanding of project costs and that of the project managers. They assumed that if the work was done, it had been invoiced and paid for, whereas we had no way of knowing if we were missing costs."
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If you do not know exactly what your subcontractors are doing, you will easily miss the deadline to tell HMRC that nothing happened.
The Pre-Notification Loophole
There is a legal way to avoid filing a blank report every single month if you know your jobs are pausing.
You can use the “pre-notification loophole.” If you know you will not have any subcontractor payments for a while, you can warn HMRC ahead of time. You just need to tell them 14 days before your quiet period begins. This acts like a pause button on your account, so the computers will not expect a monthly return or send you a fine.
Escaping the Excel Trap Before Deadlines Hit
If you are a growing main contractor or specialist subcontractor making between £1 million and £30 million a year, your project finances probably still live in messy spreadsheets. This “Excel trap” makes it incredibly difficult to see live subcontractor costs across multiple active sites.
When you upgrade to a proper system, you eliminate the risk of missing a nil return and save massive amounts of time. Lee Covington, Owner of the UK-based E&N Group, saw this immediately after switching from manual tracking.
"It’s at least a full-time job’s worth of work saved. And it means when I look at the numbers, I know they’re right – nothing’s gone missing."
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Fast Setup Without the ERP Headache
Many construction owners put off upgrading their software because they fear a massive, disruptive IT project that will pause their business. But avoiding these new automated HMRC fines does not require a complex, expensive ERP system.
Planyard is built specifically to sit right over your existing accounting tools like Xero or QuickBooks. It provides a simple “Excel escape strategy” that works the way construction already works. You can get your first real project set up and totally under control in just 1 to 2 hours, meaning you can fix your compliance issues fast without slowing down your live sites.
Using Planyard to Track Dormant Months
To stay safe from these fines, you need to know exactly what is happening on your jobs at all times. If you are a main contractor managing millions in turnover, old spreadsheets will let you down.
"Planyard is a live overview of your projects. How they are performing financially and it is basically a CVR that is live all the time. It has up-to-date data."
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Planyard gives your project managers and finance team one single, clear screen to look at. Our construction cost tracking software shows you live updates of all subcontractor billing.
With Planyard, you will instantly see if a project has gone quiet. You will know exactly when to warn HMRC, so you never get hit with a surprise penalty. If you need a refresher on the standard process, check out our guide on how to file a CIS monthly return.