Verifying Subbies: Why It Matters and How to Do It

If you’re a contractor working in the construction industry and paying subcontractors, there’s a good chance you’re already familiar with the Construction Industry Scheme (CIS). But one step that often gets overlooked—or causes a bit of head-scratching—is verifying your subbies with HMRC.

It might sound like just another bit of admin, but it’s actually a really important part of keeping your CIS responsibilities in check. In this blog, we’ll explain what verification is, why you need to do it, how it’s done, and what can go wrong if you skip it. Spoiler alert: HMRC does not look kindly on skipping it. Let’s break it down.

What Does It Mean to “Verify” a Subcontractor?

Verifying a subcontractor means checking with HMRC to confirm whether they’re registered under the Construction Industry Scheme (CIS), and what rate of deduction you should apply to their payments—20%, 30%, or 0% (gross).

This isn’t about checking if they’re good at their job (that’s your call!). It’s a way of making sure you’re deducting the right amount of tax and reporting it correctly to HMRC. Think of it as the CIS equivalent of checking someone’s paperwork before they start.

Why It’s So Important

There are a few good reasons to take CIS verification seriously:

✅ It’s a legal requirement

HMRC requires you to verify new subcontractors unless they’ve worked for you in the current or previous two tax years. Skipping verification can lead to incorrect deductions—and that means trouble.

✅ You’ll know how much tax to deduct

Once verified, HMRC tells you the correct deduction rate. Get it wrong, and you could end up owing money to HMRC (not ideal), or upsetting your subbie by deducting too much (also not ideal).

✅ Avoid penalties and delays

If you don’t verify and apply the wrong rate, you might not be compliant with CIS. That could mean penalties, interest, and a lot of back-and-forth with HMRC. Nobody wants that admin headache.

When You Need to Verify

You must verify a subcontractor before you make their first payment, unless they’ve worked for you recently. Even if your subbie swears they’re registered under CIS, you still need to check with HMRC to confirm their details and get their CIS status.

How to Verify a Subcontractor Through HMRC

Luckily, verifying a subcontractor doesn’t involve carrier pigeons or endless phone calls anymore. HMRC gives you a few options:

🔧 Use your payroll or CIS software

Most modern payroll software has a built-in CIS verification tool. It sends the relevant info to HMRC and brings back the deduction rate—simple!

🖥️ Use HMRC’s online CIS service

You can log in to the HMRC CIS online service to verify subbies manually. You’ll need:

• The subcontractor’s name or business name

• Their Unique Taxpayer Reference (UTR)

• Their National Insurance number or company registration number

HMRC will confirm their CIS status and tell you which deduction rate to use.

The Different CIS Deduction Rates

Once verified, you’ll be told to deduct at one of the following rates:

• 20% – For registered subbies

• 30% – For unregistered subbies or those with incomplete details

• 0% (Gross) – For subbies approved for gross payment status (they handle their own tax)

Applying the wrong rate can lead to incorrect submissions, penalties, and awkward phone calls from accountants or HMRC.

What Happens If You Don’t Verify?

Let’s say you skip verification and just deduct 20% because “that’s what you always do.” If your subbie was supposed to be on 30%, you’re liable for the missing 10%, plus potential penalties and interest. That’s money out of your pocket.

If they should have had 0% gross status and you deduct 20% anyway, your subbie won’t be thrilled, and you’ll probably be fielding some frustrated phone calls.

Moral of the story? Always verify. It’s quicker and easier than cleaning up the mess later.

Keeping on Top of Verifying Subbies

If you’ve only got a few subcontractors, it might feel manageable. But as your business grows, keeping up with verification, deduction calculations, monthly CIS returns, and payment statements can quickly turn into a full-time job. That’s where we come in.

How We Can Help

We support contractors with all aspects of CIS—including subcontractor verification. With our payroll bureau on your side, you can rest easy knowing:

• Subbies are verified correctly and on time

• The right deductions are made every month

• Monthly CIS returns are submitted promptly

• Payment and deduction statements are accurate and ready to send

It’s one less thing for you to worry about—and it means your CIS obligations are always in hand.

Final Thoughts

Verifying subcontractors might not be the most glamorous part of running a business, but it’s an essential part of getting CIS right. And once you know the ropes, it becomes second nature.

So before you next pay a new subbie, take a few minutes to verify them through HMRC. It’ll keep you compliant, save you time later, and help you avoid unnecessary penalties.