CIS verification: how to verify a subcontractor

CIS verification is the check you run with HMRC before you pay a new subcontractor, and it tells you which deduction rate to use: 20% if they’re registered, 30% if they’re not, or 0% if they hold gross payment status. You do it through the free HMRC CIS online service or commercial CIS software. You also have to verify a subcontractor you’ve used before if they haven’t appeared on one of your CIS returns in the current or last 2 tax years.

When you have to verify

Before the first payment. Not before the job, not after the invoice lands. HMRC’s wording is that you verify before you can pay a new subcontractor, and the reason is simple: verification is what tells you the rate, and you can’t deduct the right amount without it.

The one people miss is the second rule. A subcontractor you’ve used for years still needs re-verifying if they haven’t been on a CIS return of yours in the current or last 2 tax years. Someone you had on a big job in 2023, nothing since, back on site this month? Verify them again. Their status may well have changed while they were off your books.

If you’re taking on a subcontractor for the first time, verify them the moment you agree the work, not the week their invoice is due. Doing it late is how you end up guessing at 20% under time pressure and getting it wrong.

What you need before you start

Verification fails on mismatched details more than anything else, so get this straight first.

From your side:

your Unique Taxpayer Reference (UTR)

your HMRC accounts office reference

your HMRC employer reference

From the subcontractor, depending on how they trade:

Sole trader: their UTR and their National Insurance number. Temporary NI numbers can’t be verified, which means anything starting with “TN” or with 2 digits.

Limited company: company name, company UTR and company registration number.

Partnership: nominated partner details, the trading name and the partnership UTR.

Here’s the line that decides whether this works: the details you give HMRC must exactly match the details the subcontractor used when they registered. Exactly. Not the name on the side of their van, not the name they invoice under, not what’s in your phone. The name HMRC has.

Doing the verification

Two routes, and which one you use is decided by volume rather than preference.

The free HMRC CIS online service covers most small contractors. Commercial CIS software does the same job with the rest of your paperwork attached. If you need to verify more than 50 subcontractors, the free service won’t take it and you have to use commercial software.

HMRC comes back with two things: whether the subcontractor is registered for CIS, and what rate of deduction to use, or whether you can pay them without deducting anything at all.

That answer is the instruction. You don’t get to decide the rate, and neither does the subcontractor. Whatever HMRC tells you is what you apply.

What the rates mean when you get them back

Registered: 20%

Not registered: 30%

Gross payment status: 0%

The deduction never comes off the whole invoice. Start with the gross amount and take off what the subcontractor paid for: VAT, consumable stores, fuel used except for travelling, plant hire, manufacturing or prefabricating materials, and materials where they paid for them directly. Then apply the percentage to what’s left.

Watch the fuel line, because it catches people both ways. Fuel used on the job comes out. Travel and subsistence stay in and get deducted from.

Worked example

A subcontractor invoices you £4,200 plus VAT. On it: £1,000 of materials they bought and have receipts for, £300 of plant hire, and £2,900 of labour.

Take the VAT out. Take out the £1,000 of materials and the £300 of plant hire. That leaves £2,900 liable to deduction.

HMRC verified them as registered, so you deduct 20% of £2,900, which is £580. You pay them £3,620 plus the VAT, and £580 goes to HMRC.

Now run it again with the same invoice and no verification done, so you’ve got them down as unregistered at 30%. That’s £870 instead of £580. A £290 swing on one invoice, purely on a check that takes a few minutes.

And if you’d forgotten to strip the materials out and applied 20% to the full £4,200, you’d have deducted £840 and short-paid a subcontractor by £260 on work he’d already paid for out of his own pocket. That’s the phone call nobody wants.

Common mistakes

Details that don’t match HMRC’s record. The commonest failure by a distance. Ask for their UTR in writing and check the trading name against what they registered with, not what’s on the invoice.

Trying to verify a temporary NI number. Anything starting “TN” or 2 digits won’t verify. They need their real number.

Assuming a long-standing subcontractor is still fine. If they’ve been off your returns for the current or last 2 tax years, verify again.

Deducting from the whole invoice. Materials, plant hire, consumable stores, VAT and non-travel fuel all come off first.

Guessing at 30% to be safe. Over-deducting isn’t the cautious option. It’s money out of someone else’s business that you then have to unpick.

Do this in FieldHive

Once you’ve verified someone and made a deduction, you owe them a payment and deduction statement within 14 days of the tax month ending. Build the statement free in your browser, with the deduction worked out from the gross and materials figures. If you’re invoicing under CIS yourself, the CIS and VAT invoice generator handles the deduction and the reverse charge on the same document.

Aid, not advice

This guide explains how CIS verification works so you can run it properly and deduct the right amount. It is not tax advice. If you are unsure whether someone should be a subcontractor or an employee, or how CIS interacts with your own tax position, speak to your accountant or HMRC.

Rates, thresholds and procedure checked on gov.uk August 2026: CIS deduction rates 20% / 30% / 0%; verification requirements; the 14-day payment and deduction statement deadline.