Short answer: before you pay a subcontractor for work inside CIS, verify them with HMRC unless you have included them on a CIS return in the current or last 2 tax years. Use HMRC's free CIS online service or CIS software, with your UTR, accounts office reference and employer reference and their exact registered details. HMRC gives a verification number and the rate: 0%, 20% or 30%.
Step by step
- Check the work is inside CIS. Verification only matters for payments under a contract for construction operations. Installing a complete heating, water or ventilation system is inside; repairs to a system, such as new taps or an extra radiator, are not (CIS340 Appendix A.16). If a single contract mixes the two, all payments under it are inside (para 2.21). Our CIS guide for building services firms sets out where the line falls.
- Check they are self-employed for this job. CIS does not apply to employees (CIS340 para 1.8), and GOV.UK says you may get a penalty if someone should be an employee instead. HMRC's Check employment status for tax (CEST) tool gives HMRC's view for a specific engagement. Your monthly return includes a declaration that employment status has been considered (CIS340 para 1.6).
- Decide whether you need to verify. You do not need to verify a subcontractor you last included on a return in the current or 2 previous tax years (CIS340 para 3.2). If you don't verify, pay them on the same basis as last time, unless HMRC has told you otherwise (para 3.3).
- Agree the contract first. HMRC asks for confirmation that a contract has been agreed, or that you have formally accepted a tender (para 3.6).
- Gather the details. They must "exactly match the details the subcontractor used to register with HMRC" (GOV.UK). See the table below.
- Verify. Use the free HMRC CIS online service or commercial CIS software. GOV.UK says that if you need to verify more than 50 subcontractors, you need commercial CIS software.
- Record the result. Keep the verification reference number, the rate and the date. For a 30% result the number has one or two letters on the end, and it must go on your monthly return and on the subcontractor's payment and deduction statement (para 3.8).
- Pay at that rate until HMRC says otherwise. If HMRC moves a subcontractor from gross to net, it gives contractors 35 days' notice (para 3.10).
The details HMRC asks for
| Who | What you need |
|---|---|
| You, the contractor | Your name, UTR, accounts office reference and employer reference |
| Sole trader | Name, UTR and National Insurance number. GOV.UK: temporary numbers, starting with "TN" or 2 digits, cannot be verified |
| Limited company | Company name, company UTR and company registration number |
| Partnership | Firm name, the partner's name and the firm's UTR, plus the partner's UTR or National Insurance number (or, for a corporate partner, its UTR or company registration number) |
Use the legal name the subcontractor registered with, not a trading name. CIS340 para 6.3 says that if HMRC cannot identify the subcontractor from the details given, it will tell you to deduct at the higher rate.
What HMRC tells you
| Result | Deduction | Verification number on returns and statements? |
|---|---|---|
| Gross payment status | None | No |
| Registered for payment under deduction | Standard rate, 20% | No |
| Not registered, or HMRC cannot verify the details | Higher rate, 30% | Yes, with the letters on the end |
HMRC's example (CIS340 para 3.8): a contractor verifies five subcontractors at once and four are matched. The four share the reference V0004528765; the fifth, unmatched, gets V0004528765/A. The subcontractor needs that number later to get credit for the deductions.
Worked example: three new subcontractors for a school extension
A building services firm wins a contract to install the complete heating and hot water systems in a new school extension, which is construction work inside CIS. It takes on three subcontractors it has never used.
| Subcontractor | Details given | Result | What the firm does |
|---|---|---|---|
| Pipefitter, sole trader | Name, UTR, National Insurance number | Matched, net: 20% | Deducts 20% from labour; no reference needed on the return |
| Controls electrician, limited company | Company name, company UTR, company number | Matched, gross | Pays in full; still lists the firm on the monthly return |
| Labourer, sole trader | Trading name only, and a temporary National Insurance number, which cannot be used to verify | HMRC cannot identify them: 30%, reference ending /A | Deducts 30%, shows the full reference on the return and the statement, and asks the labourer to sort out their registration with HMRC |
The following year the firm uses the pipefitter again. It included them on a return within the last 2 tax years, so it does not need to verify again and pays at 20%, as last time.
The CIS calculator works out each deduction and the dates that follow from it.
Who does what
- The contractor checks employment status, verifies when needed, applies the rate, records the reference and declares on each monthly return that everyone who needed verifying has been verified (CIS340 para 1.6).
- The subcontractor registers with HMRC and gives their legal name, UTR and National Insurance number or company registration number (para 6.3).
- HMRC tells you the rate and tells you if it changes.
If you pay a subcontractor's nominee, such as a workmate or relative, you must verify both the subcontractor and the nominee (para 6.4).
What to record
- Subcontractor's legal name, any trading name, UTR, and National Insurance number or company registration number
- Date verified, the verification reference number and the rate
- The contract or accepted tender the verification relates to
- Your employment status check for the engagement
- Any letter from HMRC changing the rate, and the date it takes effect
- For each payment: gross amount excluding VAT, materials, and the deduction (para 3.18)
Keep CIS records for at least 3 years after the end of the tax year they relate to. HMRC can fine you up to £3,000 if you cannot show them (GOV.UK). From 6 April 2026, a contractor that paid no subcontractors in a month must file a nil return or tell HMRC about a period of inactivity (CIS340 para 4.18).
Keeping verification records in Field Suite
- Subcontractor records: each subcontractor has their UTR, CIS status (gross 0%, net 20% or unverified 30%) and HMRC verification number. You verify with HMRC yourself; Field Suite keeps the result.
- Payments: the deduction is worked out on labour only, never on materials or VAT, and payments are grouped into tax months from the 6th to the 5th.
- Statements and returns: each subcontractor gets a monthly PDF statement, and you get the month's figures as a CSV for your CIS300 return.
- Documents: insurance, Gas Safe, F gas and other documents are stored with expiry dates, and the office is reminded 30 and 7 days before and on the day.
See subcontractor and CIS management, read about subcontractor documents to check, check prices, or book a demo.
Field Suite is job management software, not a firm of accountants. HMRC decides the rate for each subcontractor; ask your accountant about anything unusual.
Questions
Do I need to verify a subcontractor every time I pay them?
No. Once verified, keep paying at that rate until HMRC tells you of a change. You only verify again if they have not been on your return in the current or last 2 tax years.
Can I verify by phone?
GOV.UK lists two ways: the free HMRC CIS online service and commercial CIS software.
Why did HMRC return 30% when they say they are registered?
HMRC gives the higher rate when it has no record of the registration or cannot verify the details for any other reason (CIS340 para 3.7). Check the details match exactly: the registered legal name rather than a trading name, and a full National Insurance number rather than a temporary one. Deduct 30% until HMRC tells you otherwise.
Sources
- GOV.UK, What you must do as a CIS contractor: verify subcontractors. https://www.gov.uk/what-you-must-do-as-a-cis-contractor/verify-subcontractors
- GOV.UK, What you must do as a CIS contractor: overview. https://www.gov.uk/what-you-must-do-as-a-cis-contractor
- GOV.UK, What you must do as a CIS contractor: record keeping. https://www.gov.uk/what-you-must-do-as-a-cis-contractor/record-keeping
- HMRC, Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340), updated 27 August 2026, paras 1.6, 1.8, 2.21, 3.2 to 3.10, 3.18, 4.18, 6.3, 6.4 and Appendix A.16. https://www.gov.uk/government/publications/construction-industry-scheme-cis-340/construction-industry-scheme-a-guide-for-contractors-and-subcontractors-cis-340
- HMRC, Check employment status for tax (CEST). https://www.gov.uk/guidance/check-employment-status-for-tax
Last checked: 5 November 2026 against the sources above.
Checked in detail: HMRC CIS 340 (updated 27 August 2026) paras 1.6, 1.8, 2.21, 3.1 to 3.10, 3.18, 4.16, 4.18, 4.20, 6.3, 6.4 and Appendix A.16, the GOV.UK CIS contractor pages (overview, verify subcontractors, record keeping) and the CEST guidance page, all read on GOV.UK.
Field Suite is job management software for UK building services firms, not a consultancy. Your own risk assessments, contracts and advisers decide what applies to your work. Spotted a mistake? Email info@fieldsuiteapp.com and we correct it.