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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): scheme overview: CIS - from 6 April 2007 - the verification process

Before a contractor makes the first payment to a subcontractor the contractor must contact HMRC to verify the subcontractor.

Verification is to confirm that the subcontractor is:

  • known to HMRC,
  • registered within CIS and
  • to obtain details of their tax treatment (COG910080).

Verification can be done by:

  • telephone
  • internet
  • letter

To be able to verify the subcontractor the contractor will need sufficient information for HMRC to be able to confirm that the subcontractor is known to HMRC and registered for CIS.

  • Unique Taxpayer Reference (UTR)
  • National Insurance Number (NINO) or Company Registration Number (CRN)
  • name or trading name of registered subcontractor
  • address of registered subcontractor
  • contact telephone number.

The contractor will also be expected to confirm that a:

  • tender is in place or
  • contract has been signed or
  • work order is in place.

If the subcontractor is successfully verified the contractor will not need to verify them again for any payments in the current tax year or the two tax years subsequent to the date of verification or last payment.

If the contractor paid subcontractors in the two tax years prior to the start of the new scheme and HMRC was able to verify them the contractor was sent a form CIS333 advising him:

  • that he did not need to verify them and
  • which rate of deduction to apply to payments made to them.

The contractor can verify several subcontractors at the same time. HMRC will provide a verification reference (VR) for all verified subcontractors. The same VR will apply to all subcontractors verified at that time. An example of a VR is V1234567890. The contractor will then be told which tax treatment to apply to payments made to each subcontractor:

  • gross payment or
  • payment under deduction.

The contractor should continue to apply that tax treatment to all payments made to the subcontractor unless HMRC notify a change in tax treatment (COG910100).

A contractor with several contractor schemes can verify subcontractors in each scheme at the same time.

If the verification check is unsuccessful the contractor will be provided with a verification reference unique to the unverified subcontractor. This number will differ from the one given for successful verification by containing letters at the end. For example, V1234567890/AA. The contractor will be advised that:

  • the subcontractor is not registered for CIS
  • they may make payments but must make deductions at the higher rate
  • they should tell the subcontractor to contact HMRC and arrange for CIS record to be set up.

The contractor should record the relevant VR on the monthly return (CIS300) against each subcontractor to whom it relates unless it has already been pre-populated by HMRC. HMRC will pre-populate the return of subcontractors who have been verified or paid for:

  • 3 months following verification or
  • 3 months after the last payment to the subcontractor.
  • if the VR relates to an unmatched subcontractor the contractor should also record the VR on any payment statements issued to that subcontractor. (COG910050).


If a subcontractor:

  • starts work for a contractor within a group of companies and
  • has formerly worked for and been verified (within the current or previous two tax years) by another contractor in that group
  • the contractor will not need to verify the subcontractor again.

Caseworkers must:

  • bear this in mind when testing the verification process:

    • particularly where a subcontractor is shown on a CIS300 return without a verification number
    • has had no deductions made or deductions made at 20%.