Your Plain-English Guide to CIS Returns for Subcontractors
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If you work in construction and get paid by a contractor, the Construction Industry Scheme almost certainly applies to you, and monthly returns are part of the deal. This guide explains exactly what is required, what goes wrong, and how to get compliant without the headache.
Why CIS returns matter and what is at stake
The Construction Industry Scheme is HMRC’s mechanism for collecting tax at source from subcontractors working in the UK construction industry. Contractors deduct a percentage from your pay, 20% if you are registered, 30% if you are not, and pay it directly to HMRC on your behalf. Filing returns correctly is what ensures those deductions are accounted for and can be offset against your tax bill.
Since April 2026, updated CIS administration measures have come into force, including an exemption for payments made to local authorities and public bodies. If your work crosses those boundaries, the rules that apply to you may have shifted. Getting this wrong is not a minor admin error; it is a compliance failure with financial consequences.
A late CIS return carries a penalty of £100 from day one. According to HMRC guidance, penalties for serious non-compliance can reach 30% of the tax evaded, and HMRC has stepped up enforcement activity since 2025 using targeted audits and letter campaigns.
Where most subcontractors and contractors go wrong
The mistakes I see most often are not complicated. They are the result of people trying to manage CIS returns alongside a full working week on site, without any clear system in place. Common errors include missing filing deadlines and failing to verify subcontractors before making payments. Both carry penalties that accumulate fast.
Filing late or not at all
Under HMRC rules, contractors must file a monthly return even when no subcontractor payments were made that month, unless they have notified HMRC in advance that they are inactive. Many people miss this nil return requirement entirely. A nil return is still a legal obligation, and the £100 penalty does not care whether any money changed hands.
Getting employment status wrong on the return
Every monthly CIS return requires a declaration that the subcontractors listed are not employees. Getting this declaration wrong carries a penalty of up to £3,000. This is not a technicality HMRC overlooks; it sits at the centre of what CIS compliance is designed to enforce.
“Most of the subcontractors I help with CIS were not doing anything dishonest. They were just busy working and the admin slipped. Getting it sorted is nearly always simpler than people expect, even when they are several months behind.”
How CIS returns work, step by step
The monthly CIS process is straightforward once you know the shape of it. The deadline for each monthly return is the 19th of the following month. Filing late from day one triggers a penalty, so the timeline matters.
- Verify each subcontractor with HMRC before the first payment. This determines whether you deduct 20% (registered), 30% (unregistered) or 0% (gross payment status). You cannot apply the right deduction rate without completing verification first.
- Compile the payment and deduction figures for every subcontractor paid during the month. You need the gross amount paid, the cost of materials where applicable, and the CIS deduction made. Keep these records because HMRC can ask for them.
- File the return with HMRC by the 19th of the following month, either through the HMRC CIS online service or compatible commercial software. If no payments were made and you did not notify HMRC of inactivity in advance, file a nil return anyway.
If you are behind on returns, the process is the same but retrospective. You reconstruct the records, file for the missed months, and accept the penalties already accrued. Getting current is always better than staying behind.
Costs and what to expect
The real cost of CIS returns is not the accountant’s fee. It is the penalty exposure from late or incorrect filing, plus the hours spent chasing figures across invoices and bank statements each month. An accountant handling this for you charges a fixed amount per month, which in most cases is less than a single late-filing penalty. I work on fixed fees, so there are no surprise bills when a return takes longer than expected.
| Option | Pros | Cons |
|---|---|---|
| DIY via HMRC portal | No accountant fee | High error risk, time-consuming, no safety net if you fall behind |
| Accountant-managed filing | Accurate returns, deadlines tracked, penalties avoided | Fixed monthly or per-return fee |
How to get your CIS returns sorted today
If you are reading this because you are behind, that is the most common situation I deal with. You do not need to have everything perfectly organised before you reach out. Send me what you have and I will tell you exactly where you stand.
- Gather your payment records for any unfiled months, even rough figures help to start with. Knowing the gross amounts paid to each subcontractor is the main thing.
- Book a free 20-minute call via the link below. I will confirm what is outstanding, what penalties may already apply, and what it costs to hand this over to me on a fixed monthly fee going forward.
Ready to sort your CIS returns?
I handle monthly CIS return preparation and filing for subcontractors and contractors across the UK, on a fixed fee with no tie-in. Book a free call and I will explain exactly what is involved and what it costs.
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AAT qualified accountant based in Uttoxeter. Personal, one-to-one accounting for small businesses and sole traders across the UK.