CIS returns managed accurately and on time

Managing subcontractors already involves checking invoices, monitoring projects and making sure everyone is paid correctly. Adding monthly Construction Industry Scheme responsibilities can quickly make the administration more complicated.

Asmat & Co Accountants helps UK contractors prepare and submit accurate CIS returns, verify subcontractors, calculate deductions and maintain the records HMRC expects. We give you a clear monthly process so that deadlines are not missed and CIS does not become a last-minute problem.

Whether you run a building company, manage several construction projects or only use subcontractors occasionally, our support can be tailored around the way your business operates.

Practical CIS support for construction contractors

If your business pays subcontractors for construction work, you may need to register as a contractor under the Construction Industry Scheme.

This can apply to builders, property developers, labour agencies, civil engineering firms and other businesses operating within construction. It may also apply to a business outside the construction sector if its construction spending brings it within the deemed contractor rules.

Our CIS service can include:

• Checking whether your business needs to operate CIS
• Helping with contractor registration
• Verifying new subcontractors with HMRC
• Reviewing subcontractor employment status
• Applying the correct deduction rate
• Separating labour, materials and VAT correctly
• Preparing monthly contractor returns
• Submitting nil returns where required
• Producing payment and deduction statements
• Reconciling CIS deductions with PAYE records
• Correcting inaccurate or incomplete submissions
• Reviewing overdue returns and penalty notices
• Responding to relevant HMRC correspondence

Our wider construction accounting services can also bring together CIS, VAT, payroll, bookkeeping, annual accounts and tax planning within one organised accounting process.

Who must submit a CIS return?

You will generally need to submit a monthly return when you are registered as a CIS contractor and have paid subcontractors for construction operations during the relevant tax month.

A CIS tax month runs from the 6th of one month to the 5th of the following month. Your return reports the subcontractors you paid during that period, along with the relevant gross payments, material costs and deductions.

You may be treated as a mainstream contractor if construction work is part of your business and you pay subcontractors. Examples include:

• General builders
• Main contractors
• Property developers
• Groundwork companies
• Civil engineering businesses
• Labour agencies
• Shopfitting businesses
• Refurbishment contractors
• Property maintenance companies

A business that does not normally carry out construction work may become a deemed contractor if it spends more than £3 million on construction during the relevant 12-month period.

The rules are not based only on how your business describes itself. They depend on the work being carried out, the contractual arrangements and the payments being made. We can review your circumstances before you register or begin making deductions.

What information is included in a monthly return?

Your monthly return tells HMRC which subcontractors you paid and how CIS was applied to those payments.

Before preparing the submission, we may review:

• The subcontractor’s name and business details
• Their Unique Taxpayer Reference
• The HMRC verification result
• The gross amount paid
• Qualifying material costs
• The amount subject to CIS
• The deduction rate applied
• The total CIS deducted
• The subcontractor’s employment status
• Relevant invoice and payment dates

The figures should agree with your invoices, bank records and subcontractor statements. Our bookkeeping services can help keep this information organised throughout the month rather than trying to rebuild the records shortly before the deadline.

CIS deduction rates

HMRC confirms the rate you should use when you verify a subcontractor. The standard outcomes are:

• 20% for a subcontractor registered under CIS
• 30% for an unregistered subcontractor or someone HMRC cannot verify
• 0% for a subcontractor with gross payment status

The deduction is not normally calculated on the full invoice total. Certain amounts, such as VAT and qualifying materials directly purchased by the subcontractor, may need to be excluded before the deduction is calculated.

Materials should not automatically be accepted because they appear as a single figure on an invoice. Contractors are expected to take reasonable care and keep evidence supporting the amount excluded. We can review the invoice breakdown and help you apply a consistent approach.

Verify subcontractors before paying them

New subcontractors should normally be verified with HMRC before you make their first payment.

Verification confirms whether the subcontractor is registered and tells you which deduction rate to apply. You may also need to verify someone you have previously used if they have not appeared on a recent CIS return for the required period.

The details submitted to HMRC must match the information the subcontractor used when registering. Differences in names, trading details, company numbers or Unique Taxpayer References can prevent successful verification.

We can help you collect the correct information, complete the verification and retain the verification reference as part of your CIS records.

Check employment status carefully

Registering someone under CIS does not automatically mean that they are genuinely self-employed.

Before including a worker as a subcontractor, you should consider their actual working arrangements. Relevant factors may include who controls how the work is completed, whether the individual can provide a substitute, who supplies equipment and whether the worker carries genuine financial risk.

Incorrectly treating an employee as a subcontractor can lead to unpaid PAYE, National Insurance contributions, interest and penalties. It can also create problems with workplace pension and employment obligations.

Where your workforce includes both employees and subcontractors, our payroll services can help maintain clearer records and reconcile PAYE and CIS liabilities.

When are monthly CIS returns due?

Your return must normally reach HMRC by the 19th following the end of the relevant tax month.

For example, payments made between 6 May and 5 June must be reported by 19 June.

This deadline applies to the return itself. CIS deductions paid to HMRC are generally due by the 22nd when paying electronically or by the 19th when paying by post.

Keeping a fixed monthly routine makes these deadlines easier to manage. We can agree when invoices and payment information should be supplied to us, review the figures and prepare the submission before it becomes urgent.

Do you need to file a nil return?

From 6 April 2026, mainstream contractors that have made no subcontractor payments must normally submit a nil return or notify HMRC that they are temporarily inactive.

A nil return confirms that no payments were made during the tax month. An inactivity request may be appropriate when you know you will not be paying subcontractors for a period of up to 6 months.

Ignoring a month because no subcontractors were paid can result in a late filing penalty. We can check the status of your scheme and make sure the correct action is taken.

Payment and deduction statements

When deductions are made, contractors must provide the subcontractor with a payment and deduction statement within 14 days of the end of the tax month.

The statement should clearly show:

• The contractor’s details
• The subcontractor’s details
• The gross payment
• The cost of qualifying materials
• The amount on which CIS was calculated
• The deduction taken

Subcontractors use these statements to reconcile the deductions against their own tax position. Missing or inaccurate statements can delay repayment claims and cause disagreements about what was deducted.

We can prepare consistent statements from the records used for your monthly submission, helping both sides work from the same figures.

CIS records you need to retain

HMRC can ask to inspect the records supporting your returns. Contractors must generally keep relevant CIS records for at least 3 years after the end of the tax year to which they relate.

Your records may include:

• Subcontractor verification details
• Contracts and work agreements
• Sales and purchase invoices
• Evidence of material costs
• Bank payment records
• Monthly returns
• Payment and deduction statements
• PAYE and CIS payment confirmations
• Correspondence with HMRC
• Employment status assessments

Good records help demonstrate that reasonable care was taken when applying the scheme. They also make it easier to correct an error, respond to an HMRC question or hand information to a new accountant.

What happens if a return is late?

HMRC can issue penalties for late monthly submissions, even when the amount of CIS due is small.

The penalty regime can include:

• £100 when a return is 1 day late
• A further £200 when it remains outstanding after 2 months
• £300 or 5% of the deductions, whichever is higher, after 6 months
• A further tax-related penalty after 12 months
• Additional penalties where information has been deliberately withheld

Penalties can apply separately to each overdue return. A contractor with several missed months can therefore face multiple charges.

Late filing is only one area of risk. HMRC may also take action where subcontractors were not verified, deductions were calculated incorrectly, statements were not issued or records cannot be produced.

If your returns have fallen behind, it is usually better to identify every outstanding period and deal with them in a controlled order. We can review the position, prepare the missing information and help you respond to penalty notices where there may be reasonable grounds for an appeal.

Correcting an inaccurate return

Mistakes can occur when an invoice is changed, a material figure is entered incorrectly or a payment is allocated to the wrong period.

Common CIS errors include:

• Using the wrong deduction rate
• Omitting a subcontractor
• Reporting an invoice rather than the payment made
• Including VAT in the deduction calculation
• Excluding unsupported material costs
• Entering the wrong tax month
• Using incomplete verification details
• Incorrectly confirming employment status

An inaccurate return should not be ignored simply because it has already been submitted. We can compare the submission with your accounting records, identify the adjustment required and help correct the information through the appropriate HMRC process.

Support for subcontractors

Monthly contractor returns are submitted by businesses that pay subcontractors. If you are the subcontractor receiving payments after CIS deductions, your responsibilities are different.

You should retain every payment and deduction statement and make sure the deductions agree with the amounts you received. Sole traders generally claim credit for CIS deductions through their Self Assessment return. Limited companies usually offset qualifying deductions through their PAYE scheme.

A deduction does not necessarily represent your final tax bill. Your final position depends on your income, allowable expenses, business structure and other tax already paid. Our guide to CIS refunds for subcontractors explains how repayments arise and what can delay them.

Why choose Asmat & Co Accountants?

CIS is easier to manage when your accountant understands how construction businesses actually operate.

Invoices may include labour, materials, plant hire, retention and VAT. Payments may not be made in the same month as the work. A worker’s status may also require closer consideration than simply checking whether they have a UTR.

Asmat & Co Accountants combines technical knowledge with practical experience supporting UK businesses. Our team includes CIMA, ACCA and IFA-qualified professionals who can help you establish a reliable monthly process rather than treating every return as a separate emergency.

You receive:

• Clear explanations without unnecessary jargon
• A dedicated point of contact
• Support tailored to your business structure
• Proactive reminders about important information and deadlines
• Help communicating with HMRC
• Transparent fixed-fee options
• Joined-up support for CIS, PAYE, VAT and bookkeeping
• Guidance that can adapt as your workforce and projects grow

Get your CIS administration under control

Avoid rushed calculations, missed filings and uncertainty over subcontractor payments. Contact Asmat & Co Accountants to discuss your CIS responsibilities and put a reliable monthly process in place.

Frequently asked questions

What are CIS returns?

CIS returns are monthly submissions made by contractors registered under the Construction Industry Scheme. They tell HMRC which subcontractors were paid during the tax month, the payments made, qualifying material costs and the tax deductions taken.

When must a CIS return be submitted?

A monthly return must normally reach HMRC by the 19th following the end of the tax month. A CIS tax month runs from the 6th of one month to the 5th of the next.

Do I need to submit a CIS return if I paid no subcontractors?

From 6 April 2026, a mainstream contractor that makes no subcontractor payments will normally need to submit a nil return or notify HMRC that the scheme is temporarily inactive. Failing to take either action can result in a penalty.

Can an accountant submit my CIS return?

Yes. You can authorise an accountant to prepare and submit your monthly contractor returns. You will still need to provide accurate and timely information about subcontractors, invoices, materials and payments.

What happens if I file my CIS return late?

HMRC can charge an initial £100 penalty when a return is 1 day late. Further penalties can arise after 2, 6 and 12 months. Penalties can apply to each outstanding monthly return, so several missed filings can become expensive.