Subcontractors · Mandatory · Pre-Construction

CIS Verification Record

A record of CIS verification for each subcontractor confirming their UTR, company registration, and deduction status with HMRC.

Last reviewed: 29 March 2026 — This guide reflects UK law as of this date. Finance Act 2004 / CIS remains current with no amendments enacted as of 29 March 2026. Next scheduled review: 29 March 2027.

Legal basis	Finance Act 2004 (CIS) + HMRC CIS 340 guidance
Who must register	Any business that pays subcontractors for construction operations must register as a CIS contractor — including 'deemed contractors' whose main business is not construction but who spend more than £3m per year on construction.
Three deduction rates	0% (GPS): HMRC has confirmed GPS; VAT compliant (from April 2024). 20% (Registered net): registered for CIS but not GPS. 30% (Unregistered/unverified): not registered or HMRC cannot verify.
Verification process	Online via the HMRC CIS online service (preferred). Telephone via CIS Helpline. HMRC provides a verification number — retain as the record.
Monthly return	Due by 19th (postal) or 22nd (online/BACS) of the month following payment. Must include: each subcontractor paid; gross amount paid; materials element; tax deducted.

1. CIS Verification — A Legal Obligation Before Every First Payment

The Construction Industry Scheme requires contractors to verify every new subcontractor with HMRC before making the first payment. Verification tells the contractor what rate of tax deduction to apply. Failure to verify and deduct the correct rate means the contractor remains liable for the tax that should have been deducted — even if the subcontractor subsequently pays their own tax.

From April 2024, VAT compliance has been added to the GPS test. HMRC can revoke GPS immediately if they suspect fraud or non-compliance — and will notify contractors who have verified the subcontractor in the current or previous two tax years.

If HMRC cannot verify a subcontractor — deduct at 30%. Do not defer the payment hoping to resolve later

An 'unmatched' response from HMRC means HMRC cannot confirm the subcontractor is registered for CIS. The contractor must deduct at 30% from the labour element of payments until verification is successful.

2. CIS Verification Record — What to Document

Field	Detail
Subcontractor details	Full legal name. UTR (Unique Taxpayer Reference). Companies House number (if limited company). VAT number.
Verification date	Date HMRC was contacted for verification.
HMRC response	GPS (0%) / Registered 20% / Unmatched 30%.
Verification number	HMRC-provided verification number — retain as evidence.
GPS check (post-April 2024)	VAT compliance confirmed by HMRC as part of GPS check.
Deduction rate applied	The rate used. Confirmation of materials element exclusion.
Monthly return reference	Monthly CIS return reference for payments to this subcontractor.
P&D statement issued	Date payment and deduction statement sent to subcontractor.
Verified by	Name and role of person who carried out HMRC verification.

Common Mistakes

Making payments to subcontractors before verifying CIS status

The verification must happen before the first payment — not afterwards. If a payment is made without verification and at the wrong rate, the contractor is liable for the shortfall.

Not retaining the HMRC verification number

The verification number is the documented evidence that verification was conducted and the rate confirmed. Without it, there is no proof of the CIS obligation at the point of payment.

Paying GPS subcontractors gross without checking GPS is still current

GPS can be revoked by HMRC with relatively short notice. Contractors should monitor for HMRC notification of GPS revocation.

Not issuing payment and deduction statements monthly

Subcontractors are entitled to a payment and deduction statement within 14 days of the end of each tax month in which they were paid. Failure to issue is a compliance breach.

Including VAT in the gross amount for deduction calculation

CIS deductions apply to the labour element of payments only — not to VAT. The deduction is calculated on the gross amount excluding VAT, and after deducting the cost of materials.

3. Frequently Asked Questions

What is excluded from CIS deduction?▾

CIS deductions apply only to the labour element of payments. Excluded: VAT; directly incurred material costs (with evidence); plant hire (machinery/equipment, not plant operator labour); fuel costs for plant. Payments for professional services that are not construction operations are also excluded.

Must CIS apply to all construction work?▾

CIS applies to payments for ‘construction operations’ as defined in Finance Act 2004 s.74. Excluded from CIS: professional services (architects, surveyors); manufacture and delivery of materials not fixed on site; carpet laying (in residential premises); work done by employees under PAYE.

How does CIS interact with the VAT domestic reverse charge?▾

The VAT domestic reverse charge (in effect since March 2021) means that for most B2B construction services subject to CIS, the customer accounts for VAT rather than the supplier. CIS deductions continue to apply alongside the reverse charge.

Can a subcontractor reclaim CIS deductions?▾

Yes. CIS deductions are advance payments against the subcontractor’s tax liability. A sole trader claims them against their annual Self-Assessment tax bill. A limited company can offset CIS deductions against its PAYE liability via the Employer Payment Summary (EPS).

Generate your CIS Verification Record on Construction Suite

Construction Suite walks you through every required section with a guided Q&A — built to Finance Act 2004 / CIS — and generates a professionally formatted document in minutes.

Get started free