When you must verify
Verification comes before the money: “Before you can pay a new subcontractor, you’ll need to ‘verify’ them”1. The same applies to a subcontractor you’ve used before if you haven’t included them on a CIS return in the current tax year or the last 21.
| Subcontractor | Verify first? |
|---|---|
| New to you | Yes1 |
| On one of your CIS returns this tax year or in the last 2 | No1 |
| Used before, but not on a return in the current or last 2 tax years | Yes1 |
What you need
The details you give must exactly match the ones the subcontractor used when they registered with HMRC, so ask for them in writing before the job starts1.
| From your own records | From the subcontractor |
|---|---|
| Your Unique Taxpayer Reference (UTR)1 | Their UTR1 |
| Your HMRC Accounts Office reference1 | A sole trader’s National Insurance number; temporary numbers can’t be verified1 |
| Your employer PAYE reference1 | A company’s name, its UTR and its company registration number1 |
| A partnership’s trading name, its UTR and the nominated partner’s details1 |
You can verify through HMRC’s free CIS online service or through commercial CIS software; more than 50 subcontractors at once needs software1.
What HMRC tells you
HMRC confirms whether the subcontractor is registered for CIS and the rate to deduct, or that you can pay them without deductions1:
| HMRC’s answer | Deduct |
|---|---|
| Registered | 20%2 |
| Not registered, or details that don’t match | 30%2,3 |
| Gross payment status | Nothing2 |
The deduction is worked out on the payment less what the subcontractor paid for VAT, materials and certain other costs such as plant hire and fuel other than for travel2.
Check your company’s dates and set a reminder
Search the Companies House register. Your company page shows its filing dates, what to file next and a reminder you can set.
If HMRC can’t match them
A subcontractor HMRC can’t match to its records is treated as unmatched and has the higher rate deducted from all payments3. HMRC gives an unmatched verification reference: pass it on to the subcontractor, and tell them to check the details they gave, as the first step to registering properly3.
What happens next
Each month, the payments and deductions go on your CIS monthly return, due by the 19th, and each subcontractor gets a payment and deduction statement within 14 days of the end of the tax month2. If your own company is paid as a subcontractor, the deductions taken from it can be claimed back: read reclaiming CIS deductions as a limited company.
Verifying with Fileyear
Fileyear’s subcontractor verification sends the subcontractor’s name, how they trade and their UTR to HMRC, shows HMRC’s answer, including the rate and any verification number, and keeps it with your filings, ready for the monthly return. There’s no fee.