Why verification is the first control point
Before paying a new subcontractor under CIS, the contractor must verify them with HMRC. This is not optional and it is not a formality. The verification outcome tells the contractor exactly what deduction treatment applies to every payment made to that subcontractor.
If you skip verification — or do it late — you are applying a deduction rate based on assumption. That exposes the payment, the monthly return and the deduction statement.
The deduction rate should come from the verified record, not from what the subcontractor says, what you've done before or what feels reasonable.
What information is needed
The exact information required depends on the type of subcontractor. The details need to match HMRC records precisely. Small differences — a different spelling, a missing middle name, a wrong UTR digit — can create mismatches that push a subcontractor into the higher deduction rate.
Sole trader
- Full legal name
- UTR (Unique Taxpayer Reference)
- National Insurance number
- Trading name (if different from legal name)
Limited company
- Company name (as registered at Companies House)
- Company UTR
- Company registration number
- Trading name (if different)
Partnership
- Partnership name
- Partnership UTR
- Nominated partner name and details
This is why a clean subcontractor onboarding process matters. Contractors should not be building CIS records from text message screenshots, partial invoices and back-of-envelope detail. A structured subcontractor onboarding form collects what HMRC actually needs.
Gross payment status: the assumption that causes the most problems
Gross payment status means the subcontractor can be paid without CIS deductions being applied. It sounds simple, but it is one of the most common sources of CIS error.
The problem is that gross status must be confirmed through HMRC verification. It cannot be:
- accepted because the subcontractor tells you they are gross
- assumed because they were paid gross by a previous contractor
- carried forward because they were gross last year
- guessed on the basis that they look like a reputable firm
If a subcontractor has gross payment status, HMRC will confirm this when you verify. If HMRC does not confirm it, you should not pay gross.
If a subcontractor says they are gross, the response is: we will confirm that through verification before the payment runs.
When to re-verify a subcontractor
Verification is not a one-time event. A subcontractor may need to be verified again if they have not been included on a CIS return during the current or previous two tax years.
This is where stale subcontractor records create risk. A contractor may have verified a subcontractor correctly two years ago, stopped using them, and then brought them back without re-checking. In the gap, the subcontractor's status may have changed.
Active subcontractor management should track:
- when verification was last completed
- whether the subcontractor has appeared on a recent return
- whether their status needs refreshing before payment
What good verification control looks like
Verification should be completed and recorded before the subcontractor is included in any payment run. The record should show: the verification outcome, the date it was completed, the deduction treatment confirmed and the source reference.
No verified record means no clean CIS run. A contractor asking "what rate should I apply?" one day before the return is due has already lost control of the process.
No verified record, no clean CIS run.
Want subcontractor verification controlled before month-end?
Bookd manages CIS records, verification, monthly returns and statements through a structured monthly workflow for construction contractors.
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