CIS Monthly Returns: What Your Contractor Reports to HMRC
How CIS monthly returns work, what contractors report about your payments and deductions to HMRC, and how to check the reported figures match your records.
Key Actions
- Compare your CIS payment statements against your own records each month
- Check that your contractor is applying the correct 20% deduction rate
- Keep a record of all verification reference numbers
- Contact your contractor if any reported figures don't match your invoices
- File Self Assessment using the same figures HMRC has on record
Every month, your contractor sends a return to HMRC listing everyone they've paid under CIS. This return includes your details, how much you were paid, and how much CIS was deducted.
As a subcontractor, you don't file these returns — your contractor does. But the information on them directly affects your tax record, so it's worth understanding what gets reported and how to spot problems.
What Is a CIS Monthly Return?
A CIS monthly return is a form that contractors submit to HMRC every month. It lists all payments made to subcontractors during that tax month, along with the CIS deductions taken.
Tax months run from the 6th of one month to the 5th of the next. For example:
- Tax month 1: 6 April to 5 May
- Tax month 2: 6 May to 5 June
- Tax month 12: 6 March to 5 April
The return is due by the 19th of the month following the tax month. So payments made between 6 May and 5 June need to be reported by 19 June.
What the Return Includes About You
For each subcontractor paid during the month, the contractor reports:
| Information | What it shows |
|---|---|
| Your name | As registered with HMRC |
| Your UTR | Unique Taxpayer Reference |
| Verification number | From when the contractor verified you |
| Gross amount paid | Total before deductions |
| Cost of materials | Materials deducted before CIS calculation |
| CIS deduction amount | Tax withheld (20% or 30%) |
| Net amount paid | What you received |
The contractor also confirms that you are a self-employed subcontractor, not an employee. This declaration matters — misclassifying workers can result in penalties of up to £3,000 per worker.
How This Affects You
Your HMRC Tax Record
When HMRC receives the monthly return, they credit the CIS deductions to your tax account. This builds up throughout the year. When you file your Self Assessment, HMRC already has a record of what was deducted — and they compare it against what you claim.
If the numbers don't match, HMRC may query your return. This is why keeping your own CIS payment statements is essential — they're your evidence.
Verification Before First Payment
Before a contractor pays you for the first time, they verify your CIS status with HMRC. This tells them:
- Whether you're registered for CIS
- What deduction rate to apply (0%, 20%, or 30%)
- A verification reference number
This verification happens online and is usually instant. The contractor needs your:
- Full name (as registered with HMRC)
- Unique Taxpayer Reference (UTR)
- National Insurance number
If you can't provide these details, or HMRC can't match them, the contractor applies the 30% unregistered rate.
Re-verification
Contractors don't need to verify you every month — just before the first payment or if your details change. However, if you haven't been paid by a particular contractor for two tax years, they'll need to verify you again.
The Monthly Cycle
Here's what happens each month from your perspective:
1. You do the work and invoice the contractor
Your invoice shows the gross amount, any materials supplied, and your CIS registration details.
2. The contractor verifies you (if needed)
For first-time payments, they check your status with HMRC.
3. The contractor pays you
They deduct CIS at the appropriate rate and pay you the net amount.
4. You receive a payment statement
This shows the breakdown: gross, materials, deduction, net payment, and verification number.
5. The contractor files their monthly return by the 19th
They report all subcontractor payments for that tax month to HMRC.
6. HMRC credits your account
The deductions appear on your tax record.
What Happens If Your Contractor Files Late
Late returns mean your CIS deductions may not show on your HMRC record when expected. This doesn't affect your money — the deductions were still made — but it can cause confusion when you file your Self Assessment.
Contractor penalties for late returns:
| How late | Penalty |
|---|---|
| 1 day late | £100 |
| 2 months late | £200 |
| 6 months late | £300 or 5% of CIS deductions (whichever is higher) |
| 12 months late | Up to £3,000 or 100% of deductions |
These penalties are the contractor's problem, not yours. But if they're consistently late, your HMRC record may be incomplete, which could delay your refund.
Nil Returns
If a contractor didn't pay any subcontractors during a tax month, they can either:
- File a nil return (declaring no payments)
- Tell HMRC no return is due for those months
- Request inactivity status for up to 6 months
This doesn't affect subcontractors, but it explains why a contractor might say they're "inactive" for CIS during quiet periods.
How to Check What's Been Reported
You can check the CIS deductions credited to your HMRC account through:
Your HMRC online account:
- Sign in to your Government Gateway account
- Go to Self Assessment
- Check your CIS deductions statement
This shows the total deductions reported by all contractors for the current tax year. Compare these figures against your own payment statements.
What to look for:
- Are all your contractors listed?
- Do the total deductions match your payment statements?
- Are any months missing?
When the Numbers Don't Match
If HMRC's record doesn't match your own statements, the most common reasons are:
Contractor hasn't filed yet
If the return hasn't been submitted, the deductions won't show. Check again after the 19th of the following month.
Wrong details used during verification
If the contractor entered your UTR or NI number incorrectly, the deductions might be credited to the wrong person. Contact the contractor to check the verification details.
Contractor applied the wrong rate
If they deducted 30% but you're registered at 20%, the amounts will differ from what you expected. The money is still credited to you, but at the higher amount.
Contractor made an error on the return
Mistakes happen. If the gross amount, materials, or deduction figures are wrong, ask the contractor to submit a correction to HMRC.
What You Need to Do
As a subcontractor, your responsibilities are straightforward:
- Provide accurate details — Give contractors your correct name, UTR, and NI number
- Check every payment statement — Verify the figures match your invoice
- Keep all statements — Store them safely for your Self Assessment
- File your Self Assessment — Enter the CIS deductions exactly as shown on your statements
- Check your HMRC record — Make sure all deductions appear before you file
You don't need to worry about the monthly returns themselves — that's the contractor's obligation. But staying on top of your own records means fewer surprises at tax time.
This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.
Official Sources
- CIS for subcontractors - GOV.UK
- CIS for contractors: monthly returns - GOV.UK
- Construction Industry Scheme (CIS) - GOV.UK