The Construction Industry Scheme (CIS) is a government-sponsored system that requires certain construction companies to deduct tax from their subcontractors’ payments. This system helps to ensure that the correct amount of tax is paid by both the construction company and the subcontractor. 

One important aspect of the CIS is verifying the subcontractors that a construction company uses. This involves confirming that the subcontractor is registered for CIS and that they meet the required criteria. There are several ways to verify a subcontractor, including using HMRC’s online verification service or contacting HMRC directly. 

HMRC’s online verification service can be used to check whether a subcontractor is registered for CIS and to see their registration number. The verification service is quick and easy to use. However, it only shows the names of subcontractors registered for CIS who are also paying agents (this means they can deal with HMRC’s tax affairs on behalf of their clients). 

Verifying a subcontractor is an important part of the CIS process. By using the correct verification methods, you can be sure that your construction company is complying with the government’s regulations and that you’re paying the correct amount of tax. 

Verifying subcontractors and confirming that the correct payment information is provided ensures that your business is meeting all legal obligations. Verification should be conducted both when a new subcontractor starts working with your company and on an ongoing basis to ensure that you’re not paying tax for subcontractors who have stopped working. 

How the Construction Industry Scheme (CIS) operates?  

Construction Industry Scheme operates by the government making sure that the correct tax is being paid by both the construction company and their subcontractors. This is done by having certain construction companies deduct tax from their subcontractors’ payments. The scheme helps to ensure that everyone involved in the construction process is paying their fair share of tax.  

One important part of the scheme is verifying the subcontractors that a construction company uses. This involves confirming that the subcontractor is registered for CIS and meets the required criteria. There are several ways to verify a subcontractor, including using HMRC’s online verification service or contacting HMRC directly.  

When to verify a subcontractor?  

You should verify a subcontractor as soon as possible, but no later than 7 days after the start of the contract. You must also keep verification information on file in case HMRC requests it.  

How to verify a subcontractor?  

There are two ways to verify a subcontractor:  

Online or by contacting HMRC directly.  

Online verification is done by checking whether a subcontractor is registered for CIS and seeing their registration number using HMRC’s online verification service. This service is quick and easy to use. However, it only shows the names of subcontractors registered for CIS who are also paying agents (this means they can deal with HMRC’s tax affairs on behalf of their clients). 

If you are unable to check online whether a subcontractor is registered for CIS, or if your contractor does not have internet access, then you can contact HMRC directly. This will involve sending two forms – form CIS128A and form CIS128B – which must be completed by both yourself and the subcontractor in question. These forms need to include details of the subcontractor’s trade reference number, name, address and registration number. You must keep this information on file so that you can provide it to HMRC if requested.  

Verifying a subcontractor is an important part of the CIS process. By using the correct verification methods you can ensure that your construction company is complying with government regulations.  

HMRC’s response  

After contacting HMRC, HMRC will respond by either confirming that the subcontractor is registered for CIS and meets the required criteria or by providing specific feedback about why they do not meet the criteria. If HMRC confirms that the subcontractor is registered, then you can continue to use them. However, if HMRC does not confirm registration, then you must stop using the subcontractor and inform your contractor.  

It’s important to remember that verifying a subcontractor is an essential part of the Construction Industry Scheme. By using the correct verification methods you can be sure that your construction company is complying with government regulations.  

Government’s online verification service only shows names of subcontractors registered for CIS who are also paying agents.  

If contractor does not have internet access, then verification can be done by contacting HMRC directly.  

Two forms must be completed by both yourself and the subcontractor in question – form CIS128A and form CIS128B.  

Keep information on file so that you can provide it to HMRC if requested. 

Government’s online verification service only shows names of subcontractors registered for CIS who are also paying agents.  

If contractor does not have internet access, then verification can be done by contacting HMRC directly.  

Two forms must be completed by both yourself and the subcontractor in question – form CIS128A and form CIS128B.  

Updating subcontractor status:  

It is important to remember that you must keep verification information on file in case HMRC requests it. If at any point the subcontractor’s status changes, you must update your records as soon as possible. This may involve sending a new form CIS128A and/or form CIS128B to HMRC.  

HMRC will respond by either confirming that the subcontractor is registered for CIS and meets the required criteria or by providing specific feedback about why they do not meet the criteria. If HMRC confirms that the subcontractor is registered, then you can continue to use them. However, if HMRC does not confirm registration, then you must stop using the subcontractor and inform your contractor.  

It’s important to remember that verifying a subcontractor is an essential part of the Construction Industry Scheme. By using the correct verification methods you can be sure that your construction company is complying with government regulations.  

If you would like more information about verifying subcontractors, or if you need help complying with any other legal requirements, please get in touch with us today. Our experienced accountants can provide support and guidance to construction businesses of all sizes. We look forward to hearing from you! 

Need further help? 

If you are unsure how this process works, or if you have any concerns about what your company’s future is likely to be, don’t hesitate to get in touch with the team today on +44 (0) 20 7060 5015 or email us info@mayfairwealthadvisors.co.uk