CIS payment and deduction statements: what you should get and what to check

What a payment and deduction statement is

Under the Construction Industry Scheme, a contractor takes 20% (or 30% if you are not registered) off the labour part of your invoice and pays it to HMRC for you. That money counts towards your own tax and National Insurance bill.

The payment and deduction statement is the contractor’s written record of what they paid you and what they took off. It is how you prove to HMRC that tax has already been paid on your behalf, so it is worth more than it looks.

When you should get one

A CIS tax month runs from the 6th of one month to the 5th of the next. The contractor has 14 days from the end of the tax month to give you the statement, so for the month ending 5 June it is due by 19 June.

Contractors can issue one statement per tax month, or one per payment if they pay you more often. They can send it electronically, but only if you both agree and it comes in a form you can save and print.

If you have gross payment status and nothing is deducted, the contractor does not have to give you a statement, although many still do.

What it must show

Contractors can design their own statements, but HMRC’s CIS340 guidance says every one must include:

• The contractor’s name and employer tax reference
• The end date of the tax month, for example “tax month ending 5 June”, or the payment date if the statement covers a single payment
• Your name and Unique Taxpayer Reference (UTR)
• Your verification number, if HMRC could not verify you and the contractor deducted at the higher 30% rate
• The gross amount paid to you
• The cost of any materials that reduced the amount the deduction was worked out on
• The amount deducted

What to check every month

Most CIS problems are cheap to fix in the month they happen and expensive to fix at year end. Check each statement against your own invoice when it arrives.

• The rate. If you are registered you should be at 20%. A 30% deduction usually means the contractor could not match your details with HMRC, so check the name and UTR they hold.
• Materials. Only materials you paid for yourself come off before the deduction. If you supplied £400 of materials and the statement shows none, you have been over-deducted.
• VAT. The gross figure should not include VAT, and CIS is never deducted from the VAT on your invoice.
• The sum. The deduction should be the rate multiplied by the gross amount less materials. Our CIS calculator does it in seconds.
• Your UTR and name, exactly as HMRC has them.

If a statement is wrong, late or lost

If the figures look wrong, speak to the contractor first. It is usually a materials figure or a verification mix-up, and they can correct it on their next return.

If a statement never arrived or you have lost it, ask the contractor for another copy. HMRC says a replacement must be clearly marked “Duplicate” so it cannot be confused with the original.

If you cannot get statements at all, for example because the contractor has gone bust, write to HMRC with your name, address and UTR, the contractor’s details, the payment dates, and why you do not have the statements. GOV.UK gives the address as PT Operations, HM Revenue and Customs, BX9 1BX.

How you use them at year end

Sole traders add up the CIS deducted across all statements and enter it on the self-employment pages of the Self Assessment return. It comes off your tax bill, and if more was deducted than you owe, HMRC repays the difference. Our CIS rebate calculator gives you an idea of what that might be.

Limited companies work differently. Deductions suffered are set off each month or quarter against the PAYE, National Insurance and CIS the company owes HMRC.

Either way, keep every statement. HMRC can ask for them as evidence when you claim the deductions, and gaps in your records can slow a refund down.

Keeping your own record

The simplest protection is not relying on the contractor’s paperwork alone. If your own invoices already split labour and materials and show the CIS deduction, checking each statement is a two-minute job, and a lost statement is an inconvenience rather than a problem.

Traddie applies the right CIS rate on every invoice and keeps a running total of CIS deducted, so you can match each statement against your own figures as it arrives. See CIS deduction tracking for how it works.