Under CIS you're supposed to have tax knocked off, the contractor sends it to HMRC, and you get credit for it. When they get it wrong, you're the one HMRC chases unless you've got your paperwork straight.
This is general guidance only and is not tax advice. CIS is technical and HMRC penalties can be harsh. Always get proper advice from an accountant or tax adviser before you rely on this in a live case.
1. QUICK RECAP – HOW CIS IS MEANT TO WORK
Under the Construction Industry Scheme:
If you're a subcontractor, the contractor:
- Verifies you with HMRC.
- Deducts CIS at 20% if you're registered, 30% if you're not, or 0% if you have gross payment status.
- Takes the deduction on the labour element only, not on materials.
Every month, the contractor must:
- File a CIS return by the 19th.
- Pay the deducted CIS to HMRC by the 22nd.
- Give you a payment and deduction statement within 14 days of month-end.
For you, those CIS deductions:
- Count as tax already paid towards your self-assessment (sole trader/partnership) or PAYE/NIC bill (if you're a company).
- Should show up on your HMRC account as "CIS suffered" once you file your returns correctly.
If that chain breaks anywhere, you end up stuck in the middle between HMRC and the contractor.
2. SIGNS CIS HAS BEEN DONE WRONG
Stuff to look out for:
- No CIS statements – they're deducting tax but never giving you proper monthly deduction statements. That's your first red flag.
- Wrong deduction rate – you're registered but they keep taking 30%, or you've got gross status and they're still deducting.
- Deductions on materials – they're calculating CIS on the full invoice instead of knocking off your materials first.
- HMRC doesn't see your CIS – you know they've deducted CIS (you've got statements), but when you or your accountant check your HMRC position, the credit isn't showing up how it should.
- Rumours they're not paying HMRC – late returns, requests to "re-issue" invoices without CIS, or open talk that they're in trouble.
You can't control what they do with HMRC, but you can protect yourself if you keep the right records.
3. STEP-BY-STEP IF YOU THINK CIS IS WRONG
Step 1 – Get your paperwork straight
Gather:
- All invoices you've sent them.
- Bank statements showing net payments.
- Every CIS deduction statement they've given you.
- Your own CIS status confirmation (UTR, verification, gross/net status).
Check:
- Are the CIS amounts on the statements consistent with your invoices and the expected rate?
- Are they deducting only on labour (not materials)?
- Are there any months where they deducted but didn't issue a statement?
If there are gaps or errors, note them clearly – month by month.
Step 2 – Ask the contractor to fix it (in writing)
Keep it calm but clear. Ask them to:
- Correct any wrong rates they've used going forward.
- Re-issue CIS statements for missing months.
- Confirm they have filed their CIS returns and paid HMRC up to date for the periods where they deducted from you.
Remind them (politely) that:
- HMRC can hit contractors with determinations, penalties and interest if they haven't operated CIS correctly or paid over deductions.
Sometimes that's enough to make them tidy it up.
Step 3 – Check your own HMRC position
For a sole trader/partnership:
- When you do your self-assessment, you can claim credit for CIS suffered based on your CIS statements, even if the contractor has been slow paying HMRC – HMRC's own guidance recognises your deduction statements as evidence.
For a company:
- CIS suffered can be offset against your company's PAYE/NIC liabilities through the company's PAYE account, using the figures from CIS statements.
If your online HMRC account doesn't line up with the CIS you've suffered, get your accountant involved early – don't wait until HMRC chases you for tax you thought was already paid.
Step 4 – Involve HMRC if the contractor won't play ball
If the contractor still won't issue proper statements or you suspect they haven't paid HMRC:
- Contact HMRC's CIS helpline or your normal tax contact.
- Provide:
- Your UTR and CIS status.
- Contractor's details (name, UTR if you have it).
- Copies of invoices, bank statements and any CIS deduction statements showing tax taken.
HMRC can:
- Chase the contractor directly for missing CIS (determinations, penalties, interest).
- In some circumstances, ensure you're not taxed twice – they generally aim not to punish subcontractors where it's clearly the contractor's failure, provided you can evidence the deductions.
You still need proper advice on how to show CIS suffered in your own returns without tripping your own risk flags.
4. IF THEY NEVER DEDUCTED CIS AT ALL
Sometimes you realise after the fact that:
- They've paid you gross when they should have deducted CIS, and
- They're now in a panic, or HMRC has noticed.
For you as subcontractor:
- HMRC can still expect you to pay the full tax bill on your profits – you don't get a credit if no CIS was ever deducted.
- If you've put aside tax properly, this is annoying but survivable. If you haven't, it's a cashflow crunch.
For them as contractor:
- HMRC can issue determinations for CIS they should have deducted, plus penalties and interest.
Your focus:
- Get an accountant to model what this means for your own tax bill.
- If the contractor is trying to claw back "CIS they should have taken" out of future payments or retentions, you'll need to balance that against what HMRC will expect from you.
5. PROTECTING YOURSELF ON EVERY JOB
Habits that stop CIS turning into a tax nightmare:
Always register and verify your status Make sure you're properly registered for CIS and the contractor has verified you before work starts – that's how you avoid 30% deductions.
Insist on monthly CIS statements Don't let months slide by without them. Those statements are your proof to HMRC that tax was deducted.
Check deductions quickly Spot wrong rates or materials included and get them corrected in the same tax year if you can – it's easier than unpicking years of mistakes later.
Keep clean records Invoices, bank statements, CIS statements and any emails about corrections, all filed by tax month. HMRC expects contractors to keep CIS records for at least three years – you should too.
Use an accountant who actually understands CIS The scheme is fiddly. A good CIS-literate accountant can make sure:
- Your CIS suffered is properly claimed.
- You don't get taxed twice because of contractor errors.
- HMRC queries are answered with the right evidence first time.
This page is guidance only and does not constitute tax or legal advice. Using it does not make us your adviser. Always get advice from a qualified accountant or tax professional on your specific CIS position.
What to do next
- Gather all your invoices, bank statements, and CIS deduction statements month by month and check for gaps or wrong rates.
- Ask the contractor in writing to correct any errors and re-issue missing CIS statements.
- Check your HMRC online account (or ask your accountant) to make sure your CIS suffered credits are showing correctly.
- If the contractor won't fix things, contact HMRC's CIS helpline with your evidence · they can chase the contractor directly.
- Get an accountant who understands CIS to review your position before your next self-assessment or PAYE filing.
Sources
- Finance Act 2004 · Part 3 (Construction Industry Scheme) · the CIS legislation covering verification, deductions, and returns
- Income Tax (Construction Industry Scheme) Regulations 2005 · detailed rules on CIS operation
- HMRC CIS guidance · HMRC's own plain-English guidance on CIS
Frequently asked questions
How do I check my CIS deductions?
Log into your HMRC online account (Personal Tax Account) and you can view your CIS deductions through the Construction Industry Scheme section. You can also call HMRC's CIS helpline on 0300 200 3210. Your contractor should give you a written statement showing the gross amount, the deduction and the net payment each time they pay you.
If a contractor isn't giving you CIS payment and deduction statements, chase them -- you need those records when you file your Self Assessment. HMRC holds records of deductions made against your UTR, but checking regularly means you'll spot mistakes before they become expensive problems at tax return time.
Can I claim back CIS deductions?
Yes. CIS deductions are advance payments of your tax -- they're not a tax on top of your tax. When you file your Self Assessment tax return, HMRC totals up your CIS deductions for the year and offsets them against your income tax and National Insurance bill. If you've had more deducted than you owe, HMRC will refund the difference.
Many subbies overpay through CIS, especially in their first year or if they have a lot of allowable expenses. File your Self Assessment on time and make sure every deduction is recorded. Refunds typically take 4-12 weeks after filing. If you're owed a lot and need it sooner, call HMRC on 0300 200 3210.
What rate should CIS deductions be?
The standard CIS deduction rate is 20% if you're registered with HMRC for CIS. If you're not registered, the contractor must deduct 30%. Some subcontractors with a strong compliance record can apply for gross payment status (0% deduction) -- but you need to meet turnover thresholds (£30,000 for individuals) and have a clean tax record for the last 12 months.
If you're having 30% deducted, get registered immediately -- it's free and you can do it online or by calling HMRC on 0300 200 3210. You'll need your UTR (Unique Taxpayer Reference) and National Insurance number. There's no reason to be paying 30% when 20% is available to anyone who registers.
What if my contractor hasn't registered me for CIS?
Your contractor doesn't register you -- you register yourself with HMRC. It's the subcontractor's responsibility to register for CIS. However, the contractor must verify you with HMRC before they pay you, and they must make the correct deductions.
If a contractor is paying you gross without verifying your CIS status, or not giving you CIS payment and deduction statements, they're breaking the law -- not you, but it can still cause you problems at Self Assessment time. If they're deducting at 30% when you're registered (should be 20%), tell them to verify your UTR with HMRC. Call HMRC on 0300 200 3210 if it's not getting sorted.
Frequently asked questions
How do I check my CIS deductions?
Log into your HMRC online account (Personal Tax Account) and you can view your CIS deductions through the Construction Industry Scheme section. You can also call HMRC's CIS helpline on 0300 200 3210. Your contractor should give you a written statement showing the gross amount, the deduction and the net payment each time they pay you.
If a contractor isn't giving you CIS payment and deduction statements, chase them -- you need those records when you file your Self Assessment. HMRC holds records of deductions made against your UTR, but checking regularly means you'll spot mistakes before they become expensive problems at tax return time.
Can I claim back CIS deductions?
Yes. CIS deductions are advance payments of your tax -- they're not a tax on top of your tax. When you file your Self Assessment tax return, HMRC totals up your CIS deductions for the year and offsets them against your income tax and National Insurance bill. If you've had more deducted than you owe, HMRC will refund the difference.
Many subbies overpay through CIS, especially in their first year or if they have a lot of allowable expenses. File your Self Assessment on time and make sure every deduction is recorded. Refunds typically take 4-12 weeks after filing. If you're owed a lot and need it sooner, call HMRC on 0300 200 3210.
What rate should CIS deductions be?
The standard CIS deduction rate is 20% if you're registered with HMRC for CIS. If you're not registered, the contractor must deduct 30%. Some subcontractors with a strong compliance record can apply for gross payment status (0% deduction) -- but you need to meet turnover thresholds (£30,000 for individuals) and have a clean tax record for the last 12 months.
If you're having 30% deducted, get registered immediately -- it's free and you can do it online or by calling HMRC on 0300 200 3210. You'll need your UTR (Unique Taxpayer Reference) and National Insurance number. There's no reason to be paying 30% when 20% is available to anyone who registers.
What if my contractor hasn't registered me for CIS?
Your contractor doesn't register you -- you register yourself with HMRC. It's the subcontractor's responsibility to register for CIS. However, the contractor must verify you with HMRC before they pay you, and they must make the correct deductions.
If a contractor is paying you gross without verifying your CIS status, or not giving you CIS payment and deduction statements, they're breaking the law -- not you, but it can still cause you problems at Self Assessment time. If they're deducting at 30% when you're registered (should be 20%), tell them to verify your UTR with HMRC. Call HMRC on 0300 200 3210 if it's not getting sorted.
Common questions
How do I check my CIS deductions?
Check the monthly CIS payment statement your contractor must give you, and cross-check it against your invoices. It shows gross pay, materials, and the 20% or 30% deduction. You can also see deductions in your HMRC personal tax account. Without statements, you can't reclaim the tax in your Self Assessment.
Can I claim back CIS deductions?
Yes. CIS deductions are advance payments of Income Tax and National Insurance, reclaimed via Self Assessment. Limited companies offset CIS deductions against PAYE/NI owed each month. Sole traders typically receive a refund within 6 to 12 weeks of submitting their return.
What rate should CIS deductions be?
20% if you're registered with HMRC, 30% if you're not, and 0% if you have Gross Payment Status. The contractor verifies your status with HMRC before paying you. If they're deducting 30%, register for CIS today. It's free and the rate drops at the next pay run.
Know someone who needs this?
This topic is sponsored by The Online Accountant.
www.theonlineaccountant.com/?utm_source=sitekiln&utm_medium=sponsor&utm_campaign=payment-section →SiteKiln's editorial team writes every guide independently. Sponsors do not review, edit or sign off on content. See our editorial standards.
Was this guide useful?
Didn't find what you were looking for?
Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.
In crisis? Samaritans 116 123 ·