CIS Record Keeping Requirements

Why CIS Records Matter

Under CIS, both contractors and subcontractors have legal obligations to maintain accurate records. Poor record keeping is one of the most common reasons for CIS problems — from incorrect deductions to failed refund claims and HMRC investigations.

If HMRC opens an enquiry into your CIS affairs, your records are your evidence. Without them, you may struggle to prove that deductions were correctly calculated, returns were accurately filed, or refund claims are legitimate.

What Contractors Must Keep

As a contractor, your record keeping obligations are extensive:

Payment Records

For every payment to a subcontractor, record:

• The subcontractor's name and UTR
• The date of payment
• The gross amount paid
• The cost of materials (if any)
• The CIS deduction amount
• The net amount paid to the subcontractor

Verification Records

For each subcontractor verified with HMRC:

• The date of verification
• The verification reference number
• The result (gross, net, or unmatched)
• The subcontractor's details used for verification

CIS Returns

Keep copies of every monthly CIS return submitted to HMRC, including nil returns. These should show:

• The tax month covered
• All subcontractors included
• The totals for gross payments, materials, and deductions
• The date of submission

Payment and Deduction Statements

Contractors must issue payment and deduction statements to subcontractors within 14 days of the end of each tax month. Keep copies of every statement issued.

Each statement must contain:

• The contractor's name, address, and employer tax reference
• The subcontractor's name and UTR
• The tax month the statement covers
• The gross amount of payment
• The cost of materials
• The CIS deduction amount
• The HMRC verification number

Employment Status Assessments

As part of your monthly return, you declare that you have considered the employment status of your subcontractors. Keep records of any assessments you have carried out, including:

• The CEST tool results (if used)
• Written contracts
• Any correspondence about working arrangements

What Subcontractors Must Keep

CIS Statements Received

Keep every payment and deduction statement from every contractor you work for. These are your evidence of CIS deductions and are essential for your Self Assessment tax return.

Income Records

Maintain a record of all construction income, including:

• Invoices issued (with labour and materials clearly separated)
• Bank statements showing payments received
• Any cash payments (with written confirmation)

Expense Records

Keep receipts and records for all business expenses:

• Tool and equipment purchases
• Vehicle fuel and maintenance receipts
• Travel costs and mileage logs
• Insurance premiums
• Phone bills
• Training course receipts
• PPE and workwear purchases

Bank Statements

Your business bank statements serve as a secondary record of all income and expenditure. Even if you keep detailed records elsewhere, bank statements provide independent verification.

How Long to Keep Records

HMRC requires CIS records to be kept for at least six years after the end of the tax year they relate to. For the 2025/26 tax year, this means keeping records until at least 5 April 2032.

Some practitioners recommend keeping records for longer — particularly if:

• You have an ongoing dispute with HMRC
• You are involved in a complex project with multi-year implications
• You are claiming Gross Payment Status (where compliance history matters)

Digital vs Paper Records

HMRC accepts both digital and paper records. However, digital records are increasingly preferred and are required under Making Tax Digital.

Advantages of digital records:

• Easier to search and retrieve
• Cannot be lost to water damage, fire, or misplacement
• Can be backed up automatically
• Easier to share with your accountant or HMRC
• Meet MTD requirements

If you keep paper records, ensure they are stored securely and organised chronologically. Consider scanning important documents as a backup.

What Happens If Your Records Are Poor?

If HMRC reviews your records and finds them inadequate:

• They may estimate your income or deductions (usually not in your favour)
• You could face penalties for inaccurate returns
• Refund claims may be rejected or reduced
• You may lose Gross Payment Status

In serious cases, deliberately destroying or falsifying records is a criminal offence.

How Accounted Manages Your CIS Records

Accounted is designed to make CIS record keeping effortless:

• Automatic transaction matching — CIS payments are identified and recorded from your bank feed
• Digital statement storage — upload and store all CIS statements securely
• Expense capture — snap receipts via WhatsApp and they are categorised and stored
• Mileage tracking — log trips and Penny calculates the HMRC-approved claim
• Audit trail — every change to your records is logged, creating a clear history

See our pricing plans for details.

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Good records protect your business and your refund. Sign up for Accounted and let Penny keep your CIS records organised and HMRC-ready.