The Construction Industry Scheme, run by HM Revenue and Customs, is how tax gets collected at source from people working in construction. A contractor pays a subcontractor for construction work, and before that payment reaches the subcontractor, the contractor has to deduct tax and send it to HMRC. It works in a similar way to PAYE, except the subcontractor still has to sort out their own tax position afterwards.

Once you're inside the Construction Industry Scheme CIS rules, missing a step costs money, which is exactly why most contractors hand the monthly admin to us rather than run it themselves. Joining the CIS scheme is usually straightforward, and if you ever stop using subcontractors altogether, coming off the CIS scheme is just as simple. We file everything through commercial software rather than paper forms, and we reconcile your tax deductions against HMRC's figures every month rather than waiting until year-end to check them.

CIS has been running since 2007, when monthly reporting for the scheme was first introduced. It's still an active area of tax compliance too. HMRC kept updating CIS guidance right through 2026, so the rules you followed a couple of years ago might not be quite the same today.

Contractors Deduct The Tax Before The Subcontractor Ever Sees It

A contractor is any business or individual that pays subcontractors for construction work. That's a wider group than most people expect. CIS isn't only for building firms. Property developers, housing associations, and some other businesses outside the construction sector can end up as CIS contractors too, particularly if they spend heavily on construction work.

In fact, if a business spends more than £3 million on construction within a rolling 12-month period, it can fall into CIS as a deemed contractor, even if construction isn't its main line of work. That catches a fair few businesses off guard.

CIS covers most on-site building work, and it also covers civil engineering work such as road building, groundworks and site preparation, not just bricks and mortar. If you're not sure whether a particular job falls inside the scheme, that's one of the first things we check.

Subcontractors Still Have Their Own Tax Position To Sort Out

Subcontractors don't file monthly CIS returns themselves. That's the contractor's job. What subcontractors do need to think about is their own annual Self Assessment tax return, where the CIS deductions already taken from their pay get factored in. If too much has been deducted over the year, that often means a tax refund is due.

Many construction workers move between being employed and being self-employed during their career, sometimes within the same year, and that shift changes how their tax is worked out. Moving into self-employment as a subcontractor brings its own tax responsibilities, and CIS was built with self-employed people working in construction in mind, whether they trade as a self-employed individual under their own name or through a limited company. That's how the Construction Industry Scheme CIS process works from start to finish, whichever side of the payment you're on. We also keep your Unique Taxpayer Reference on file once you're a client, so verifying you again in future needs no extra paperwork on your part.

Once you're set up with Vexo Accounting, filing CIS returns becomes something that just happens each month rather than something you worry about. We file CIS returns before the deadline every time, and we still file CIS returns for you even when a month has been quiet.

We Verify Every Subcontractor Before A Single Payment Goes Out

Before you pay a subcontractor for the first time, we verify them with HMRC using their Unique Taxpayer Reference and their National Insurance number, and that check confirms which deduction rate applies to their payments. There are three possible outcomes here. A subcontractor can be paid gross with no deduction if they hold Gross Payment Status; they can have the standard 20% deducted if they're CIS registered, or they can have 30% deducted if they're not registered or can't be verified, and this rate applies to all their payments until anything changes.

Whether you operate as a self-employed individual or through a limited company, the same verification rules apply, and how you pay subcontractors on the day makes no difference to which rate is used. Getting this step right matters, because it sets the deduction rate for every subcontractor payment that follows, and every subcontractor payment needs the correct rate applied before it goes out the door.

We Prepare Your Return And File It Before The Deadline Every Month

Each tax month, we pull together the payments and deductions for every subcontractor you've used, prepare your CIS return, and file it through commercial CIS software, well before the 19th deadline. Contractors are legally required to deduct money before paying most subcontractors, and we make sure you pay CIS deductions to HMRC on time too, since that payment deadline is the 22nd of the month if you're paying electronically.

Alongside the return, contractors have to give each subcontractor monthly payment and deduction statements. We issue CIS statements to every subcontractor each month, so you're never scrambling to put one together because a subcontractor has asked for it. Keeping copies of your CIS statements matters if HMRC ever asks questions later.

We check the CIS tax deducted from every payment matches what should have been withheld, we check materials costs have been handled correctly where a subcontractor has invoiced labour and materials separately, and we compare your figures against HMRC's records so nothing is left to chance. Mismatches with HMRC's records are one of the more common triggers for a compliance check, which is exactly what we're trying to avoid for you.

You could ring the CIS helpline yourself for a quick query, and for something simple that's fine. Reconciling a full month of subcontractor payments against your own records takes longer than most business owners have spare, though, which is usually why the monthly job ends up with us instead. You can view some figures through HMRC online services directly, but HMRC online services won't check the accuracy of anything before you submit it; they'll simply accept whatever's entered. We use HMRC online services alongside commercial software, so your CIS deductions are checked before they ever reach HMRC, not after.

Your monthly CIS return is prepared from the same checklist every time, which keeps things consistent whether it's a quiet month or a busy one. We treat your monthly CIS return as a routine job rather than a last-minute scramble, and a missed monthly CIS return becomes far less likely once someone else is watching the deadline for you. We start working on the figures as soon as a new tax month opens, so nothing is left until the last few days. Every tax month follows the same process once you're set up with us, and if a tax month goes by with no subcontractor payments, we still file for it. Missing paperwork from a single tax month is one of the most common reasons a return goes in late, which is why we chase outstanding information early rather than waiting.

We keep a running record of payments so nothing gets missed between one return and the next, and we reconcile payments against your bank account every month rather than only at year-end. Every set of payments gets checked against the verification result before the return is filed, and payments made to a subcontractor with Gross Payment Status still need recording correctly even though nothing is deducted from them. Once your payments are logged properly, filing the return itself takes minutes rather than hours. Payments across multiple sites are handled the same way, whether you run one project or several at once, and we double-check payments before submission rather than after.

Deductions are recorded the moment a payment goes out, not weeks later, and we keep a clear log of deductions for every subcontractor across the year. We check deductions against the verification result before anything is filed, and errors in historic deductions can often be corrected without a penalty if they're caught early enough. Your total deductions for the year feed directly into your Self Assessment tax return if you're a subcontractor, or into your own accounts if you're the contractor making them.

We Still File A Return Even When You've Paid Nobody That Month

If you haven't paid any subcontractors in a given tax month, you can still have a filing obligation. A nil return still needs to go in, and you still need to file returns even in the quietest months. It's an easy one to forget, and it's exactly the sort of thing that quietly racks up penalties if nobody's keeping track of it. We keep track of it for you, whether that means one nil return or a full set of monthly returns across a busy year.

CIS work covers more ground than a lot of people expect. Some of the areas we deal with regularly include:

• Working out whether your business counts as a CIS contractor, including the deemed contractor rules around the £3 million threshold
• Subcontractor verification, gross payment checks, and getting the correct amount deducted at the right rate
• Preparing and filing monthly CIS returns, including nil returns, and correcting earlier returns that turned out to be wrong
• Reconciling CIS deductions against your bank statements and your wider accounts, including how they interact with VAT registered businesses and the Domestic Reverse Charge
• Handling CIS for subcontractors, whether you trade as self-employed or through a limited company, and preparing the Self Assessment tax return that goes with it
• Reviewing employment status where there's a risk that a self-employed individual has been classed the wrong way
• Taking over CIS records from a previous accountant, or picking up the pieces after missed returns and preparing for an HMRC compliance check

If your situation involves something that isn't on that list, get in touch anyway. Most construction businesses have at least one CIS quirk that doesn't fit neatly into a bullet point, from a subcontractor payment made at the wrong rate to a payment scheme that's grown too complicated to track by hand. We log every subcontractor payment against the return it belongs to, so nothing gets missed at year-end, and we check every deduction is for the correct amount before that return goes in. Gross payment arrangements need reviewing occasionally too, not just set up once and forgotten. The Construction Industry Scheme applies whether you have one subcontractor or fifty, and businesses switch to us specifically because they no longer want to file CIS returns themselves every month.