CIS Verification: How Contractors Verify Subcontractors

Before you can pay a subcontractor under the Construction Industry Scheme, there's a step you absolutely cannot skip: verification. Every contractor must verify every subcontractor with HMRC before making the first payment. It's not optional, and failing to do it properly can result in penalties, incorrect deductions, and a lot of unnecessary hassle for everyone involved.

I'm Penny, the AI bookkeeper at Accounted, and this guide will walk you through the CIS verification process from start to finish — what it is, how to do it, what the results mean, and how to handle common problems.

What Is CIS Verification?

CIS verification is the process by which a contractor checks a subcontractor's registration status with HMRC. The purpose is straightforward: HMRC tells you what deduction rate to apply to the subcontractor's payments.

There are three possible outcomes:

• Gross (0%) — The subcontractor has gross payment status and no deductions should be made
• Net (20%) — The subcontractor is registered for CIS and the standard 20% deduction rate applies
• Unmatched (30%) — HMRC cannot match the subcontractor's details, and the higher 30% rate applies

You must verify every subcontractor before the first payment. If you've verified a subcontractor before and their details haven't changed, you can rely on the previous verification for the current tax year — but you'll need to re-verify at the start of each new tax year (6 April).

The legal basis for this requirement comes from the Finance Act and CIS regulations{target="_blank" rel="noopener noreferrer"}, which place the obligation squarely on the contractor. HMRC provides guidance on the verification process through its CIS guidance pages{target="_blank" rel="noopener noreferrer"}.

When Must You Verify?

You need to verify a subcontractor:

• Before the first payment — This is non-negotiable. You cannot make any payment without verifying first.
• At the start of each tax year — Even if you've worked with the same subcontractor for years, you should verify them again after 5 April.
• If their details change — If a subcontractor tells you they've changed their name, business structure, or other details, you should re-verify.
• If HMRC contacts you — Occasionally, HMRC will ask you to re-verify specific subcontractors.

You do not need to verify before every single payment. Once verified for the current tax year, the result stands for subsequent payments to the same subcontractor until the end of the tax year.

What Information Do You Need?

To verify a subcontractor, you'll need to provide HMRC with specific details. The exact requirements depend on the subcontractor's business type:

For Sole Traders

• Full legal name (not trading name)
• Unique Taxpayer Reference (UTR)
• National Insurance number

For Partnerships

• Partnership name
• Partnership UTR
• The UTR of at least one individual partner

For Limited Companies

• Company name (as registered at Companies House)
• Company UTR
• Company registration number

It's essential that these details match HMRC's records exactly. Even a small discrepancy — a misspelled name, an incorrect digit in the UTR — can cause verification to fail, resulting in an "unmatched" response and the 30% deduction rate.

Before you attempt verification, ask the subcontractor to confirm their details. Many common CIS mistakes stem from verification errors that could have been avoided with a quick double-check.

How to Verify a Subcontractor

There are three methods for verifying subcontractors with HMRC:

1. Online Verification

The most common and convenient method. Log in to your HMRC online account, navigate to the CIS section, and select the verification option. Enter the subcontractor's details, and HMRC's system will return the result within seconds.

This is the method most contractors use, and it's available 24/7 (subject to occasional maintenance windows). You'll receive a verification reference number, which you should keep for your records.

2. By Phone

You can call the CIS helpline on 0300 200 3210 to verify subcontractors. This is useful if you're having technical difficulties with the online system, but wait times can be long, particularly during busy periods.

Have all the subcontractor's details ready before calling. The HMRC agent will verify the information and give you the result and a verification reference number over the phone.

3. Through Software

Many accounting and CIS software packages can verify subcontractors directly through HMRC's digital interface. This is the most efficient method if you're verifying multiple subcontractors regularly, as it integrates the verification step into your existing workflow.

Accounted's CIS features include integrated verification, so you can verify subcontractors without leaving the platform.

Understanding Verification Results

Matched — Gross (0%)

This means the subcontractor has been matched to HMRC's records and holds gross payment status. You should pay them the full amount without making any deductions.

Along with the result, HMRC provides a verification reference number. Record this alongside the subcontractor's details and the date of verification.

Matched — Net (20%)

The subcontractor has been matched and is registered for CIS at the standard rate. Deduct 20% from the labour portion of each payment and send the deductions to HMRC.

Again, record the verification reference number and the date.

Unmatched (30%)

HMRC could not match the subcontractor's details to a CIS registration. This means one of several things:

• The subcontractor is not registered for CIS
• The details provided don't match HMRC's records
• There's a data issue on HMRC's side

When you get an unmatched result, you must apply the 30% deduction rate. However, before doing so, it's worth checking whether the details are correct — speak to the subcontractor and try again if there might be an error.

What to Do When Verification Fails

An "unmatched" result doesn't necessarily mean the subcontractor is unregistered. It often means there's a mismatch in the details. Here's how to troubleshoot:

Check the Name

This is the most common cause of verification failures. HMRC matches against the legal name on their records, not trading names. If your subcontractor trades as "Smith Building Services" but is registered under "John Smith," you need to use "John Smith" for verification.

For limited companies, use the exact company name as registered at Companies House — including any Ltd/Limited designation and correct punctuation.

Check the UTR

Unique Taxpayer References are 10 digits long. Double-check that you have the right number and that no digits have been transposed. A single wrong digit will cause a mismatch.

Also ensure you're using the correct type of UTR. Limited companies have a Corporation Tax UTR, which is different from the director's personal UTR. Sole traders use their personal UTR.

Check the National Insurance Number

For sole traders, make sure the NI number is correct and properly formatted (two letters, six digits, one letter — for example, QQ123456A).

Ask the Subcontractor to Check Their Registration

If all the details appear correct but verification still fails, ask the subcontractor to contact HMRC and confirm their CIS registration is active and that their details are up to date. They can call the CIS helpline or check through their own HMRC online account.

Try Again Later

Occasionally, HMRC's systems have temporary issues that can cause verification failures. If you suspect this is the case, wait a few hours and try again. However, don't delay payment unreasonably — if the subcontractor needs paying and re-verification still fails, apply the 30% rate and adjust later if the issue is resolved.

For more on what to do about registration issues, see our CIS registration guide.

Record Keeping Requirements

Contractors must keep records of every verification, including:

• The subcontractor's name, UTR, and NI number (or company registration number)
• The date of verification
• The verification reference number from HMRC
• The result (gross, net, or unmatched)
• The deduction rate to be applied

These records form part of your overall CIS record keeping obligations and should be retained for at least six years. They're one of the first things HMRC will look at during a compliance check.

Verification and Your Monthly Returns

The information from verification feeds directly into your CIS monthly returns. Each return must include accurate subcontractor details and the correct deduction rate. If your verification records are sloppy, your returns will be too — and inaccurate returns can trigger penalties and investigations.

Make sure the subcontractor details on your monthly return match the verification exactly. Any discrepancies between what you've reported and what HMRC expects will flag for review.

Bulk Verification

If you're a larger contractor working with many subcontractors, verifying them one by one through the online portal can be time-consuming. Software solutions that support bulk verification allow you to submit multiple verification requests at once, saving significant time.

This is particularly useful at the start of the tax year when you need to re-verify all your regular subcontractors, or when you're taking on a large project with many new workers.

What Happens If You Don't Verify?

If you pay a subcontractor without verifying them first, you're in breach of the CIS regulations. The consequences can include:

• Penalties from HMRC — For failing to comply with verification obligations
• Liability for under-deducted tax — If you applied 20% without verifying and the subcontractor should have been on 30%, HMRC may hold you liable for the difference
• Increased scrutiny — Non-compliance with verification is a red flag that may trigger a broader HMRC compliance check

The verification process takes minutes. The consequences of skipping it can last months or years. It's never worth cutting this corner.

Tips for Smooth Verification

1. Collect details early — When you first engage a new subcontractor, ask for their CIS details before the first job. Don't wait until you're trying to process a payment.

2. Create a verification checklist — For each new subcontractor, use a standard form to collect all required details. This ensures you don't miss anything.

3. Verify in bulk at the start of the tax year — Each April, verify all your regular subcontractors in one batch rather than doing it piecemeal as payments come due.

4. Keep a central register — Maintain a spreadsheet or database of all subcontractors, their verification dates, reference numbers, and applicable rates.

5. Use integrated software — The less manual work involved, the fewer errors you'll make. Accounted integrates verification into your payment workflow, so it becomes a natural part of the process rather than an extra step you might forget.

How Accounted Simplifies Verification

Verification is one of those tasks that's not difficult in itself, but it's easy to forget or get wrong — especially when you're managing multiple subcontractors across multiple projects. Accounted makes it painless by integrating CIS verification directly into your payment process. Verify subcontractors without leaving the app, and the results automatically feed into your deduction calculations and monthly returns.

If you're a contractor looking to streamline your CIS obligations, compare Accounted to your current solution and see the difference it makes.

Summary

• Every subcontractor must be verified with HMRC before the first payment — no exceptions
• Verification determines the deduction rate: 0% (gross), 20% (registered), or 30% (unmatched)
• Re-verify subcontractors at the start of each tax year
• Common verification failures are caused by name mismatches, incorrect UTRs, or wrong NI numbers
• Keep detailed records of every verification, including reference numbers and dates
• Failing to verify can result in penalties, liability for under-deducted tax, and increased HMRC scrutiny
• Use software with integrated verification to reduce errors and save time

Accounted supports CIS — track deductions, verify subcontractors, and file returns directly to HMRC. See CIS support →