Guide

How to correct errors on your CIS return

Step-by-step process for correcting Construction Industry Scheme (CIS) return errors without incurring penalties. Covers different error types, amendment methods for current and previous years, dealing with wrong deductions, incorrect UTRs, and materials errors.

Construction & Property UK-wide

If you discover an error on a CIS return you have already submitted, you need to correct it. How you correct the error depends on when it occurred and what type of error it is.

Correcting errors promptly is important. HMRC will not normally charge a penalty for an honest mistake that you correct voluntarily. However, if HMRC discovers the error first, or if you delay making the correction, you may face penalties and interest charges.

This guide explains how to fix different types of CIS errors and protect your business from unnecessary penalties.

Types of CIS return errors

CIS return errors generally fall into these categories:

  • Wrong deduction rate applied - you deducted 20% when it should have been 0% (gross payment status), or 30% when it should have been 20%
  • Incorrect UTR or National Insurance number - you entered the wrong subcontractor reference number
  • Materials treatment errors - you applied CIS deduction to materials costs when you should only deduct from the labour element
  • Wrong payment amount - you reported the wrong gross payment or net payment figure
  • Missing subcontractor - you forgot to include a subcontractor on the return
  • Duplicate entry - you included the same payment twice
  • Wrong tax month - you reported a payment in the wrong period

How to correct errors - by time period

The method for correcting errors depends on when the original return was submitted.

Current and previous tax year (online amendment)

For returns submitted in the current tax year or the previous tax year, you can amend them online using the CIS online service.

  1. Sign in to the CIS online service

    Go to GOV.UK and sign in using your Government Gateway credentials. Navigate to the CIS section of your account.

  2. Find the return you need to amend

    Select the tax month containing the error. You can view and amend returns for the current and previous tax year.

  3. Make the correction

    Update the incorrect information. You can change subcontractor details, payment amounts, materials costs, and deduction amounts.

  4. Submit the amended return

    Check the amended details carefully, then submit. You will receive confirmation that the amendment has been accepted.

  5. Pay any additional deductions owed

    If your correction means you owe HMRC more money, pay promptly to avoid interest. Use your normal CIS payment reference.

  6. Keep a record of the amendment

    Note what you changed, when, and why. HMRC may ask for evidence of the error and correction.

Earlier tax years (contact HMRC)

For returns from more than one tax year ago, you cannot amend them online. You must contact HMRC directly.

  1. Prepare the details of the error

    Write down which tax month and year the error occurred, what was wrong, and what the correct figures should be.

  2. Contact the CIS helpline

    Call HMRC on 0300 200 3210 (open Monday to Friday, 8am to 6pm). Have your employer PAYE reference and the return details ready.

  3. Follow HMRC's instructions

    HMRC will tell you how to submit the correction. This may involve sending a written notification or using a specific form.

  4. Pay any additional tax owed

    If HMRC assesses additional tax, pay promptly. Interest runs from when the tax was originally due.

Correcting specific error types

Wrong deduction rate

If you applied the wrong deduction rate, the correction depends on whether you deducted too much or too little.

Deducted too much:

  • Amend the return to show the correct deduction
  • HMRC will credit your account for the overpayment
  • This reduces your next CIS payment to HMRC
  • You should also correct the Payment and Deduction Statement given to the subcontractor

Deducted too little (or nothing when you should have):

  • Amend the return to show the correct deduction
  • Pay the additional deduction to HMRC as soon as possible
  • Interest may apply from the original due date
  • Consider whether you can recover the underpaid amount from the subcontractor (this depends on your contract)

Wrong UTR or National Insurance number

If you entered the wrong Unique Taxpayer Reference (UTR) or National Insurance number for a subcontractor:

  • The subcontractor may not get credit for the deduction against their tax liability
  • Verify the correct details using the CIS verification service before amending
  • Amend the return with the correct reference number
  • Issue a corrected Payment and Deduction Statement to the subcontractor

If verification fails because the subcontractor's details do not match HMRC records, the subcontractor needs to update their details with HMRC directly.

Materials treatment errors

CIS deductions should only apply to the labour element of a payment, not to materials. If you deducted CIS from the full payment including materials:

  1. Calculate the correct deduction

    Work out the materials cost that should have been excluded. Recalculate the CIS deduction on the labour element only.

  2. Amend the return

    Update the materials figure and the deduction amount to show the correct values.

  3. Adjust your HMRC account

    If you overpaid deductions, HMRC will credit your account. The credit reduces your next payment.

  4. Issue corrected statement to subcontractor

    Give the subcontractor an amended Payment and Deduction Statement showing the correct figures.

Evidence for materials: You should have evidence to support the materials cost claimed. Acceptable evidence includes:

  • Invoices for materials purchased by the subcontractor
  • Receipts or delivery notes
  • A breakdown of materials on the subcontractor's invoice
  • Industry standard material cost estimates (for some work types)

HMRC can challenge materials claims that are not properly evidenced.

Missing subcontractor from return

If you paid a subcontractor but forgot to include them on the return:

  • Verify the subcontractor if you have not already done so
  • Amend the return to add the missing subcontractor and payment details
  • Pay any additional deduction to HMRC
  • Issue a Payment and Deduction Statement to the subcontractor (within 14 days of the amendment)

If you discover this error close to the next return deadline, you may need to include the missing payment on the current return rather than amending the old one. Contact HMRC if you are unsure.

Avoiding penalties when correcting errors

HMRC's approach to penalties depends on the nature of the error and whether you disclosed it voluntarily.

Voluntary disclosure (you find and report the error):

  • No penalty for genuine mistakes if you took reasonable care
  • Reduced penalties (if any) for careless errors disclosed voluntarily
  • Interest still applies on late payments, but penalty may be waived

Prompted disclosure (HMRC finds the error):

  • Higher penalty rates apply
  • Penalties can range from 15% to 100% of the underpaid tax
  • Interest applies from the original due date

What counts as reasonable care

HMRC will not normally penalise you for errors if you took reasonable care. Reasonable care includes:

  • Verifying subcontractors before first payment
  • Keeping accurate records of payments and deductions
  • Using reliable software or systems to calculate deductions
  • Reviewing returns before submission
  • Seeking professional advice for complex situations
  • Acting promptly when you discover errors

If HMRC does issue a penalty and you believe you took reasonable care, you can appeal.

Interest on underpaid deductions

When you correct an error that means you owe HMRC additional CIS deductions, interest is charged from when the payment was originally due.

Interest rate
Bank of England base rate plus 2.5%
Calculation method
Simple interest (not compounded) calculated daily
Start date
Day after the original payment deadline (22nd/19th of the month)
End date
Day you pay the corrected amount
Minimum interest
Interest is charged regardless of whether the error was careless or innocent

Interest is not a penalty - it compensates HMRC for having the use of money that should have been paid earlier. Interest applies even if you have a reasonable excuse for the error itself.

To minimise interest: Pay the corrected amount as soon as you discover the error, even before you formally amend the return.

If you overpaid deductions

When you correct an error that means you overpaid CIS deductions to HMRC:

  • HMRC will credit the overpayment to your employer account
  • The credit reduces your next CIS/PAYE payment due
  • You do not receive interest on overpayments
  • If the credit exceeds your next payment, you can request a refund

Make sure to amend the Payment and Deduction Statement given to the subcontractor so they have the correct record for their tax return.

Record keeping for error corrections

Whenever you correct a CIS return error, keep detailed records showing:

  • The original return details and the error found
  • When and how you discovered the error
  • How you calculated the correction
  • The date you made the correction
  • Evidence supporting the correct figures
  • Copies of amended Payment and Deduction Statements
  • Any correspondence with HMRC

Keep these records for at least 3 years after the end of the tax year they relate to. HMRC can enquire into CIS returns within this period.

When to get professional help

Consider getting help from an accountant or tax adviser if:

  • The error involves multiple tax months or years
  • Large amounts of tax are involved
  • You are unsure whether subcontractors were correctly verified
  • Employment status questions are involved (subcontractor vs employee)
  • HMRC has already contacted you about a compliance check
  • You want to appeal a penalty

The cost of professional advice is often worthwhile for complex errors, particularly if penalties may apply.

Preventing future errors

To reduce the risk of CIS return errors:

  • Verify every subcontractor before the first payment - and keep verification records
  • Re-verify returning subcontractors if you have not paid them in the current or previous 2 tax years
  • Use CIS-compatible software to calculate deductions automatically
  • Separate materials and labour on subcontractor invoices before calculating deductions
  • Review returns before submission - check UTRs, amounts, and deduction rates
  • Set calendar reminders for the 19th filing deadline and 22nd payment deadline
  • Keep good records of all payments, verifications, and statements

Related guides

CONSTRUCTION & PROPERTY Advantage

Commercial CIS software

Most commercial CIS software packages include error checking features that can catch common mistakes before you submit. Features to look for include:

  • Automatic verification status checking
  • Materials calculation validation
  • Duplicate payment detection
  • UTR format validation
  • Amendment audit trails

Using approved software can reduce errors and provide better records if HMRC asks questions.

CIS online service on GOV.UK

Use the Construction Industry Scheme online service

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