CIS Verification Process: How to Verify Subcontractors with HMRC

CIS verification is the process of checking a subcontractor's tax status with HMRC before making payments under the Construction Industry Scheme. As a contractor, you are legally required to verify every subcontractor before their first payment and to apply the correct deduction rate based on the verification result. Getting this wrong means you could apply the wrong deduction rate, face penalties, or create problems for your subcontractors. This guide explains the full verification process.

What Is CIS Verification?

CIS verification is how HMRC confirms a subcontractor's registration status and tells you the correct deduction rate to apply. When you verify a subcontractor, HMRC checks their details against their records and returns a verification number along with the applicable deduction rate.

• A mandatory check before making the first payment to a new subcontractor
• Confirms whether the subcontractor is registered under CIS
• Returns the correct deduction rate: 0% (gross), 20% (standard), or 30% (unregistered)
• Provides a verification number that must be recorded against the subcontractor
• Can be done online through HMRC's CIS system or by phone

Information Needed for Verification

You need different information depending on whether the subcontractor is an individual, a company, or a partnership. Having the correct details before you start avoids failed verification attempts.

• Individual: legal name, Unique Taxpayer Reference (UTR), and National Insurance number
• Company: company name, UTR, and company registration number (Companies House number)
• Partnership: partnership name, UTR, and the UTR of at least one partner
• The details must exactly match what HMRC holds -- common name variations can cause failures
• Ask subcontractors to provide their CIS registration details during onboarding

How to Verify Online

The most common and efficient method is to verify subcontractors online through HMRC's CIS system. You need a Government Gateway account with CIS access. The process takes a few minutes per subcontractor.

• Log in to HMRC online services using your Government Gateway credentials
• Navigate to the CIS section
• Select "Verify a subcontractor"
• Enter the subcontractor's details (name, UTR, NI number or company registration)
• HMRC returns the verification result immediately
• Record the verification number, deduction rate, and date
• CIS software can automate this process using HMRC's API

Understanding Verification Responses

HMRC returns one of three verification responses. Each determines the deduction rate you must apply to payments to that subcontractor. Applying the wrong rate is a compliance failure.

• Gross payment (0%): subcontractor has gross payment status -- pay the full amount with no deduction
• Net payment (20%): subcontractor is registered -- deduct 20% from labour element of payments
• Higher rate (30%): subcontractor is not registered or could not be matched -- deduct 30%
• If you get a 30% result, check the details with the subcontractor before paying
• A 30% result does not necessarily mean fraud -- it often means a data mismatch

When to Verify and Re-verify

You must verify a subcontractor before their first payment. After that, re-verification is needed in certain circumstances. HMRC expects you to keep verification current.

• Before the first payment to any new subcontractor
• If you have not included the subcontractor in a CIS return for the current or previous two tax years
• If HMRC notifies you that the subcontractor's status has changed
• Best practice: re-verify at the start of each tax year (6 April) for active subcontractors
• Keep a record of every verification, including the date and result

Record-Keeping Requirements

HMRC requires you to keep records of all CIS verifications. If you are audited, you need to produce evidence that you verified each subcontractor and applied the correct deduction rate. Digital records are accepted and preferred.

• Store the verification number provided by HMRC
• Record the date of verification and the deduction rate returned
• Keep the subcontractor's details used for verification (name, UTR, NI/company number)
• Records must be retained for at least 6 years after the end of the tax year
• Digital systems with timestamps provide stronger audit evidence than paper records
• Be able to produce a complete verification history per subcontractor on request