The Construction Industry Scheme runs on a monthly cycle, verify, deduct, report, repeat. That rhythm is exactly why year-end catches so many construction businesses out. It’s the one point in the year where the monthly routine isn’t enough on its own, and where money genuinely gets left unclaimed if nobody stops to reconcile the full picture.
This guide covers what actually needs doing at CIS year-end, for contractors and subcontractors, and where the real risk sits if it’s skipped.
What Counts as CIS Year End
CIS follows the standard UK tax year, running from 6 April to 5 April. The final monthly CIS period covers 6 March to 5 April, with the return due by the usual 19th of the month deadline, so 19 April.
That deadline is the trigger point. Everything below should be done around it, not weeks or months later once records have gone cold.
For Contractors: Your Year-End CIS Checklist
File the final monthly return properly, not just on time
The last return of the year carries more weight than a normal month’s. It’s the point where HMRC’s systems, and your own records, close off the full year’s CIS activity. Errors here are harder to quietly correct later.
Reconcile total deductions made against total deductions reported
This is the single most commonly skipped step, and the one most likely to cause a problem down the line.
- Add up every deduction made across all twelve monthly returns
- Compare this against the deduction statements actually issued to subcontractors
- Investigate any mismatch immediately, not at the point a subcontractor queries their own tax return
A discrepancy here doesn’t just risk an HMRC query. It can leave a subcontractor unable to properly evidence their own CIS suffered when they come to file their Self Assessment or reclaim an overpayment.
Reverify subcontractors with a gap in engagement
If you haven’t paid a particular subcontractor at all during the current tax year or the previous two, you’re required to reverify their status with HMRC before paying them again. Year-end is a natural moment to review your subcontractor list and flag anyone who needs reverifying before the next payment goes out, rather than discovering it mid-invoice run.
Check your record-keeping is actually complete
CIS records need to be retained for at least three years after the end of the tax year they relate to. That includes verification records, deduction statements, and the returns themselves. Year-end is the right time to confirm nothing from the past twelve months has gone missing, while it’s still findable.
For Subcontractors: Claiming Back What You’re Owed
This is where the real money sits, and where it most often gets left unclaimed.
If you’re a sole trader or partnership
CIS deductions suffered throughout the year are set against your Income Tax and Class 4 National Insurance liability through Self Assessment. Because the 20% deduction rate doesn’t account for your actual allowable expenses, it’s extremely common for the tax deducted at source to exceed your real liability for the year, meaning you’re due a refund.
- Gather every monthly deduction statement before you file
- Reconcile the total against what your contractor’s records show
- File promptly, the refund doesn’t arrive until the return is submitted and processed
If you operate through a limited company
This works differently, and it’s where money most commonly gets stuck. CIS deductions suffered by a limited company aren’t reclaimed through Corporation Tax. They’re set against the company’s own PAYE, National Insurance, and CIS liabilities as an employer, reported through the Employer Payment Summary as part of your regular payroll reporting.
If the CIS suffered during the year exceeds what the company owes HMRC in PAYE and NIC, there’s no automatic refund. The company has to actively request repayment of the excess from HMRC after the tax year ends. Plenty of construction companies simply never do this, and the money sits unclaimed indefinitely.
Protecting Gross Payment Status at Year End
Gross payment status means no CIS deduction is taken from your payments at all, a genuine cash flow advantage. HMRC reviews this status based on your compliance record, including whether returns and other tax obligations have been filed and paid on time throughout the year.
Small, seemingly minor lapses add up. A couple of late monthly returns, a missed VAT deadline, a late Self Assessment payment, none of these might feel serious individually, but together they can be enough for HMRC to withdraw gross status at its annual review. Year end is the point to check your own compliance record honestly and address anything outstanding before that review happens, not after status has already been lost.
Common Mistakes That Cost Money at CIS Year End
- Filing the final monthly return but never reconciling the full year’s figures against subcontractor statements
- Limited company subcontractors never submitting a repayment request for CIS suffered in excess of their PAYE liability
- Sole trader subcontractors delaying their Self Assessment filing, and therefore delaying a refund they’re already owed
- Paying a subcontractor without reverifying their status after a gap in engagement, resulting in the wrong deduction rate applied
- Treating VAT and CIS as unrelated, when a construction business dealing with the VAT domestic reverse charge needs both reconciled together, not in isolation
How Construction Tax Accountants Help
CIS year-end sits at the intersection of payroll, VAT, and Corporation Tax, and getting it wrong rarely shows up immediately; it shows up months later as unclaimed money or an HMRC query. Here’s how we support construction businesses through it properly.
- We reconcile your full year’s CIS deductions against subcontractor statements before the final return is filed, catching discrepancies while they’re still easy to fix
- We identify and reverify any subcontractors with a gap in engagement, so the correct deduction rate is applied from the first payment
- We prepare and submit repayment claims for limited company subcontractors with CIS suffered in excess of their PAYE and NIC liability, so that money doesn’t sit unclaimed
- We review your compliance record ahead of HMRC’s annual gross payment status review, and help resolve anything that puts your status at risk
- We build your CIS reconciliation into your wider year-end accounts process, alongside VAT domestic reverse charge treatment and work in progress valuation, rather than treating it as a separate task
- We keep your CIS records properly organised and retained for the required period, so you’re never scrambling to find evidence years later
Get in touch with Construction Tax Accountants before your next CIS year-end; the reconciliation done properly now is what stops money quietly disappearing later.
FAQs
When is the CIS year-end deadline?
The final monthly CIS period runs from 6 March to 5 April, with the return due by 19 April, following the same monthly filing pattern as the rest of the year.
How do limited company subcontractors reclaim CIS deductions?
Through the Employer Payment Summary, setting CIS suffered against the company’s PAYE and National Insurance liability. If deductions exceed what’s owed, the company must actively request a repayment from HMRC, it isn’t issued automatically.
Why would a sole trader subcontractor be due a CIS refund?
Because the standard 20% deduction rate doesn’t account for allowable business expenses. Once expenses are deducted through Self Assessment, actual tax liability is often lower than the CIS already deducted at source, resulting in a refund.
Can a contractor lose gross payment status because of small compliance issues?
Yes. HMRC’s annual review considers the full compliance record, including CIS returns, VAT, and Self Assessment or Corporation Tax filings. A pattern of minor late filings across the year can be enough to trigger withdrawal of gross status.
How long do CIS records need to be kept?
At least three years from the end of the tax year they relate to, including verification records, deduction statements, and monthly returns.
