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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): CIS from 6 April 2007 - background

On 06-04-2007 the CIS was reformed. The CIS (Reform) was introduced with new legislation and a new set of rules and regulations.

  • The Finance Act 2004 and
  • The Income Tax (Construction Industry Scheme) Regulations 2005 SI2005/No2045.


From April 2007 a contractor must contact HMRC before making payments to a subcontractor. HMRC will verify the subcontractor and provide the contractor with a verification number. HMRC will also inform the contractor of the correct tax treatment for the subcontractor. (COG910040).

Payment Statements  

The contractor must provide a written pay statement to each subcontractor from whom deductions have been made. The contractor must provide the subcontractor with a statement at least every tax month but can do so more frequently if he wishes.

For more guidance on pay statements see COG910050.

Monthly Returns  

There is no annual return under CIS (Reform).

The contractor must provide a monthly return to HMRC. The return shows

  • all payments made to subcontractors in the tax month and
  • all deductions made from payments to subcontractors in the tax month.

The return also includes declarations that

  • all subcontractors that need to be verified have been verified and
  • that the employment status of subcontractors has been considered.

More information on monthly returns can be found at COG910150.