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HMRC internal manual

Construction Industry Scheme Reform Manual

Verify subcontractor: Update Unmatched Verifications

CISR51600 Action guide contents

Before making a first payment to a subcontractor a contractor must contact HMRC using their preferred channel, confirm that the subcontractor has registered under CIS and obtain their payment status details.

Where you are unable to verify the subcontractor from the details supplied, the subcontractor must be treated as ‘Unmatched’ and suffer a deduction from all payments at the higher rate of deduction.

Note that a subcontractor may be unmatched for a number of reasons but most likely because, either the

  • subcontractor has not registered, or completed registration, for CIS
  • contractor has incomplete, or has misquoted, the subcontractor details and a matching CIS record cannot be found at the time of contact with HMRC.In unmatched verification cases the process ends with the allocation of a unique unmatched Verification Reference (VR) number to that contact/call and the contractor being instructed to

  • Pass on the unmatched VR number to the subcontractor*, and
  • Tell the subcontractor that they either need to check their verification details, or the subcontractor must visit an HMRC Enquiry Centre in order that an identity check may be carried out as the first step to them registering for CIS.*This step is important because the unmatched VR number will be used to identify the subcontractor and the period of deduction at the higher rate once details of their CIS record have been established.

Where the unmatched verification has resulted from a simple error in the details quoted it is possible that a further verification check can be carried out before payment takes place. At that point the unmatched verification can be effectively cancelled by matching it to a known registered subcontractor record and by confirming their current payment status.

Subcontractor not registered for CISWhere the subcontractor has not registered for CIS it will be necessary for them to do so. After the subcontractor has undergone an identity check, completed the appropriate application form and registered for CIS, their record will be updated to show a revised payment status of either ‘Gross’ (No deductions) or ‘Net of Deduction’. As part of the registration process HMRC will issue a confirmation letter (CIS313) notifying the subcontractor of their payment status. At the same time HMRC will issue a CIS316B to all contractors who have paid the subcontractor and made a deduction at the higher rate in order to notify them of the change of payment status from the higher rate to either ‘Net of Deduction’ or ‘Gross’.

Note: Where the subcontractor has been paid by a contractor (under deduction at the higher rate) prior to the subcontractor’s Registration for CIS, details of the payments and deductions made from the subcontractor prior to Registration will not automatically flow from the Contractor(s) monthly returns to the subcontractors record following registration.