Before making a new subcontractor’s first payment under the Construction Industry Scheme (CIS), verify their details with HMRC and use the payment status HMRC provides. An invoice showing a UTR, or a subcontractor saying they are “registered for CIS”, does not give you authority to choose their deduction rate.
The practical order is straightforward: check that CIS applies, collect the correct business details, complete verification, save the result and set up the payment correctly. Doing this during onboarding gives you time to resolve mismatches before an invoice becomes due.
Check employment status before starting verification
First, confirm that the work falls within CIS and assess the worker’s employment status for this engagement. Someone who should be treated as an employee must normally be paid through PAYE, even if they have a UTR and have previously worked as a subcontractor.
CIS verification establishes the payment treatment. It does not decide whether the working arrangement is genuinely self-employed.
Keep a record of your status assessment alongside the contract. If the arrangement requires payroll, resolve that before processing payment through CIS. Interface Accountants’ payroll services can support the appropriate payroll process.
Collect details for the business you are actually paying
Ask the subcontractor to confirm their legal business structure. A trading name on an invoice may not make it clear whether you are dealing with an individual, partnership or limited company.
Collect the following information:
- Sole trader: name used with HMRC, Unique Taxpayer Reference (UTR) and National Insurance number.
- Limited company: registered company name, company UTR and company registration number.
- Partnership: partnership name and UTR, plus the relevant partner’s name and identifying details. For an individual partner, have their UTR or National Insurance number available; for a corporate partner, have its UTR or company registration number.
Use the identifiers requested by the verification service. For partnerships, confirm which partner is being paid on the partnership’s behalf; separate verification can be required where more than one partner receives payments.
Never substitute a director’s personal UTR for a company UTR. Check spellings and numbers against the details registered with HMRC, and collect sensitive information through a secure process.
Check whether a returning subcontractor needs verification
A subcontractor who is new to your business generally needs verification before their first CIS payment. For someone returning, check your previous CIS returns.
You must verify them again if they have not appeared on a return in the current tax year or either of the previous two tax years. This is a tax-year test, rather than a simple 24-month expiry date.
For example, for a payment in October 2026, check returns covering 2026/27, 2025/26 and 2024/25. A new project alone does not require fresh verification where the existing record remains applicable. Continue using the established payment treatment unless HMRC has instructed otherwise.
Submit the verification through the correct contractor account
Use HMRC’s CIS online service or suitable CIS software. Have your contractor UTR, accounts office reference and employer reference ready. Your own contractor registration should already be in place.
Enter the subcontractor under the correct business type and submit their registered details. Verification should relate to an agreed contract or formally accepted tender, rather than a speculative check on an unrelated business.
Save the response against the subcontractor’s record. Capture the verification date, details submitted, payment status and verification reference. Make the result accessible to whoever approves payments, so it does not remain in one person’s inbox.
Apply HMRC’s result and resolve unmatched details
The verification outcome determines the deduction rate:
- 0%: HMRC confirms gross payment status, so no CIS deduction is required.
- 20%: the standard deduction rate applies.
- 30%: the higher rate applies where the subcontractor is unregistered or HMRC cannot verify their details.
An unmatched result does not automatically mean the subcontractor has done anything wrong. A typing error, incorrect business type or mismatched name can prevent HMRC from locating the right record.
Compare your submission with the information supplied. Correct your own entry errors; if the details still do not match, ask the subcontractor to resolve their registration information with HMRC.
Where HMRC has instructed you to deduct 30%, follow that instruction until HMRC confirms a different treatment. A promise that registration is being sorted is not enough to use 20% or pay gross.
Retain the full unmatched verification reference, including any letter suffix. It must accompany the relevant higher-rate entries on the monthly return and the subcontractor’s payment and deduction statement.
Check the calculation before releasing the first payment
Verification supplies the rate; you still need to calculate the correct deduction base. Exclude VAT charged by a VAT-registered subcontractor and allowable direct materials costs before applying the CIS percentage. Check supporting evidence for materials rather than accepting an unexplained invoice split.
For example, a subcontractor who is not VAT registered invoices £1,500, including £300 of qualifying materials they bought directly. At a verified rate of 20%, the deduction is £240: (£1,500 − £300) × 20%. You pay the subcontractor £1,260 and account for £240 to HMRC.
Record the payment and deduction, and issue the required statement within 14 days after the tax month ends. Keep CIS payment records for at least three years after the end of the relevant tax year.
Frequently asked questions
Is having a UTR enough to prove CIS registration?
No. A UTR identifies a taxpayer, but does not establish their CIS payment status. Use HMRC’s verification result to determine the deduction rate.
Can my accountant verify subcontractors for me?
Yes, an appropriately authorised agent can carry out verification. Agree who collects the details, saves the response and updates the payment record. Responsibility for meeting contractor obligations remains with your business.
Does gross payment status mean I leave the payment off my return?
No. Payments within CIS must still appear on the monthly return when the subcontractor is paid gross. Gross status removes the deduction, not the reporting requirement.
What if a sole trader starts invoicing through a limited company?
The company is a different legal entity. Confirm which business is supplying the work, collect the company’s details and verify it before its first payment. Do not transfer the sole trader’s payment status.
Must I verify every subcontractor again each April?
No. There is no blanket annual requirement. Check whether they appeared on your returns within the relevant tax-year window and act on HMRC payment-status notices.
Make verification part of every new payment setup
A reliable first payment starts with the correct legal entity, a completed status assessment and a saved HMRC verification result. Build those checks into onboarding, then keep payment records current as subcontractors return or change business structure.
Interface Accountants’ CIS return services support return preparation, review and submission. An organised process now makes future payments easier to approve and monthly reporting easier to check.