How do I file monthly CIS returns?

At Towerstone Accountants we provide specialist CIS accountancy services for contractors, subcontractors, and construction businesses across the UK. We created this webpage for people working in construction who want clear guidance on CIS deductions, refunds, verification, and monthly return responsibilities, without jargon. Our aim is to help you stay compliant with HMRC, avoid penalties, and keep your cash flow and records under control.

Filing monthly CIS returns is one of those responsibilities that every contractor knows exists but many find stressful or confusing, especially in the early stages of running a construction business, the rules feel detailed, the deadlines are strict, and the penalties for getting it wrong arrive far faster than most people expect, in my experience the stress usually comes not from the process itself but from uncertainty about what HMRC actually want and how the pieces fit together month by month.

The good news is that once you understand how monthly CIS returns work and you put a simple routine in place they become a predictable part of running your business rather than something that hangs over you, most of the problems I see arise because returns are missed during quiet months, subcontractors are not verified properly, or records are not kept in a way that matches what HMRC expect.

In this article I am going to walk you through exactly how to file monthly CIS returns, who needs to file them, what information you need before you start, how the process works in practice, what deadlines apply, and how to avoid the common mistakes that lead to penalties, the aim is to give you a clear working understanding rather than a technical checklist.

Understanding what a monthly CIS return actually is

A monthly CIS return is a report that contractors must submit to HMRC detailing payments made to subcontractors for construction work during a tax month, the return tells HMRC who was paid, how much was paid, how much of that payment related to labour, and how much tax was deducted under the Construction Industry Scheme.

The tax month for CIS runs from the 6th of one month to the 5th of the next, not from the calendar month, this catches people out regularly and is one of the first things I clarify with new clients.

Every contractor registered for CIS must submit a return for every tax month, even if no subcontractors were paid, in that case a nil return is still required, missing a return entirely is what triggers automatic penalties.

Who needs to file monthly CIS returns

Monthly CIS returns are filed by contractors, not subcontractors, this distinction is important because subcontractors often worry about CIS returns when it is not their responsibility.

You need to file monthly CIS returns if your business is registered as a contractor under CIS, this includes:.

• Construction companies paying subcontractors

• Sole traders or partnerships acting as contractors

• Businesses that are not mainly construction but spend significant amounts on construction work

Once registered the obligation to file returns continues until HMRC are told that CIS activity has stopped, even months with no payments still require a return.

What information you need before filing a CIS return

Before you can file a CIS return you need accurate records for the tax month, trying to file from memory or incomplete paperwork is where errors start.

You will need:.

• Details of each subcontractor paid during the period

• Confirmation that each subcontractor has been verified with HMRC

• The gross amount paid to each subcontractor

• The amount charged for materials if applicable

• The labour amount subject to CIS

• The tax deducted at the correct rate

Having clear invoices from subcontractors makes this much easier, ideally invoices should separate labour and materials clearly, this reduces the risk of deducting CIS incorrectly.

Verifying subcontractors before filing returns

Verification is a required step before paying a subcontractor and including them on a CIS return, it confirms whether the subcontractor is registered and what deduction rate applies.

Verification results determine whether you deduct tax at 20 percent 30 percent or not at all, failing to verify usually results in the higher 30 percent deduction which often leads to disputes later.

In practical terms verification should be done as soon as you take on a new subcontractor, leaving it until the return is due creates unnecessary pressure.

Calculating CIS deductions correctly

CIS deductions are normally calculated on the labour element of the subcontractor’s invoice, materials that the subcontractor has paid for should not be subject to CIS, VAT is also excluded if the subcontractor is VAT registered.

This is one of the most common error areas, if invoices do not clearly separate labour and materials HMRC expect reasonable judgement, but consistent errors can trigger queries.

Getting this right protects both you and the subcontractor, incorrect deductions often delay refunds and damage working relationships.

How to actually file a monthly CIS return

Monthly CIS returns are filed online using HMRC approved software or HMRC’s own CIS online service, paper returns are no longer accepted.

The basic process follows a consistent pattern.

First you log into your CIS account and select the correct tax month.

You then confirm whether you have paid any subcontractors during that period, if not you submit a nil return.

If you have paid subcontractors you enter details for each one, including their verification status and payment figures.

Once all subcontractors are entered you submit the return and receive confirmation from HMRC.

From that point the return becomes part of HMRC’s records and the deductions declared must be paid over by the relevant deadline.

Filing nil CIS returns and why they matter

Nil returns are one of the most overlooked aspects of CIS compliance, if you are registered as a contractor HMRC expect a return every month unless you tell them otherwise.

A nil return simply tells HMRC that you did not pay any subcontractors during the tax month, it takes very little time to submit but failing to do so triggers penalties just like a missing return with payments.

I regularly see businesses accumulate hundreds or thousands of pounds in penalties simply because they assumed no work meant no return was needed.

CIS return deadlines and penalties

Monthly CIS returns must be submitted by the 19th of the month following the end of the tax month, for example payments made between 6 April and 5 May must be reported by 19 May.

Penalties for late returns are automatic and escalate the longer the return remains outstanding, even if no tax is due.

The penalties start small but can add up quickly, particularly if several months are missed, appealing penalties is difficult unless there is a genuine reasonable excuse.

Paying CIS deductions to HMRC

Submitting the return is only part of the process, the tax deducted from subcontractors must also be paid to HMRC.

CIS deductions are usually paid alongside PAYE and National Insurance if you operate payroll, the payment deadline is strict and late payment attracts interest and penalties.

Matching payments to returns is important, HMRC cross check what you report against what you pay, discrepancies often lead to letters or compliance checks.

Issuing CIS deduction statements to subcontractors

After filing your CIS return you must provide subcontractors with deduction statements showing what they were paid and what tax was deducted, these statements are important evidence for their own tax returns.

Providing clear timely statements helps subcontractors stay compliant and reduces the risk of disputes, from a business perspective it also demonstrates professionalism.

Amending a CIS return if you make a mistake

Mistakes do happen and HMRC allow CIS returns to be amended, the key is to act quickly.

If you realise a return is wrong you can submit an amended return for the same tax month, correcting figures or adding missing subcontractors.

Correcting errors proactively is always better than waiting for HMRC to raise them, it also reduces the risk of penalties for careless mistakes.

Keeping records to support your CIS returns

HMRC require contractors to keep CIS records for several years, this includes subcontractor details verification results invoices payment records returns and deduction statements.

Good record keeping makes filing returns easier and reduces stress if HMRC ever ask questions, it also helps you spot issues early rather than months later.

Using software to file CIS returns

Most contractors now use accounting or payroll software that includes CIS functionality, this can automate much of the process and reduce errors.

Software can help with verification calculations return submission and record keeping, but it still relies on accurate input, understanding the underlying rules remains important.

Common mistakes I see when filing CIS returns

The most common mistake is missing nil returns during quiet periods.

Another frequent issue is incorrect treatment of materials leading to over deductions.

I also see problems where subcontractors are paid before verification or where details are entered incorrectly causing mismatches on HMRC’s system.

Leaving returns until the last minute increases the risk of all of these issues.

How an accountant helps with monthly CIS returns

An accountant can take responsibility for the entire CIS process, from verification and calculations through to return submission and payment reminders.

They ensure returns are filed on time every month, errors are corrected quickly, and records are kept in a way that stands up to HMRC scrutiny.

For many contractors this support removes a significant administrative burden and reduces the risk of penalties.

What to do if you want to stop filing CIS returns

If you stop paying subcontractors you should notify HMRC so they know CIS activity has ceased, otherwise they will continue to expect monthly returns.

Failing to do this is another common cause of penalties, simply stopping work does not automatically stop CIS obligations.

Final thoughts from experience

Filing monthly CIS returns is not optional and it is not something to ignore until the end of the year, it is a regular obligation with strict deadlines.

Once you understand what HMRC expect and put a simple system in place the process becomes routine rather than stressful.

The key is consistency, accurate records, and timely submissions, get those right and CIS returns become just another manageable part of running a construction business rather than a constant source of worry.

You may also find our guidance on What are the deadlines for CIS submissions and How do I verify a subcontractor under CIS helpful when dealing with related CIS questions. For a broader overview of CIS rules, compliance, and support, you can visit our cis guidance hub.