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CIS Compliance Checklist: What Every Construction Company Needs to Know

Stay compliant, avoid penalties, and protect your reputation.

If you work in construction in the UK, the Construction Industry Scheme (CIS) affects how you handle payments and tax deductions. This checklist will help you meet your CIS obligations confidently and accurately.

Setting up for CIS
  • Register with HMRC for CIS

Contractors and subcontractors must register with HMRC under the CIS. Contractors are required to do so before hiring and paying subcontractors.

  • Verify subcontractors

Check each subcontractor's status with HMRC to determine the correct deduction rate (standard, higher or gross payment status).

  • Keep accurate subcontractor details

Maintain up to date records of each subcontractor's name, UTR (Unique Taxpayer Reference), National Insurance number (for individuals only), and VAT registration number (if applicable).

Managing CIS Deductions
  • Deduct the correct CIS tax

Apply the appropriate deduction rate (0%, 20%, or 30%) depending on the subcontractor's verification results. CIS deductions only apply to labour so any materials charged by subcontractors can be paid without deduction.

  • Provide subcontractors with monthly payment and deduction statements

Every month contractors must issue a statements to each subcontractor paid in the month. The deduction statement must show gross amount due, CIS deductions taken, and net payments made.

  • Pay CIS deductions to HMRC on time

Every month you must pay HMRC the value of any CIS deductions withheld from payments made to subcontractors. Payments are made at the same time as PAYE liability payments, due by 22nd of the same month as the tax month end. If you are also a subcontractor, you can offset amounts withheld from your receipts against this liability.

Monthly Filing Responsibilities
  • Submit monthly CIS returns to HMRC

File returns by the 19th of each month for the tax month ending the 5th of the same month. The return must include all subcontractors you have paid in the month, including those who are 0% rate. 

  • Declare nil returns if no payments are made

Even if you have not paid any subcontractors in a month, you are still required to a CIS return.

  • Correct any errors promptly

If are errors are found, amended returns must be filed to avoid penalties.

Record Keeping Requirements
  • Keep CIS records for at least 3 years

You must store copies of invoices, deduction statements, payment records and verification details.

Common CIS Pitfalls to Avoid
  • Failing to verify subcontractors before paying them
  • Paying subcontractors gross (0%) without approval
  • Missing monthly CIS report filing deadlines
  • Poor / late record keeping leading to errors

Need Help Managing Your CIS Obligations?

At NEXA Accounting, we help construction companies stay compliant, minimise risks, and focus on what they do best - building great projects. 

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Contact us today to find out how we can take the hassle out of CIS for you.

If you would like a PDF version of this document, please drop us an email and we will be happy to send you a copy.

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