What Records Should I Keep for CIS?

If you work in the construction industry as a contractor or subcontractor under the Construction Industry Scheme (CIS), keeping accurate records is essential. HMRC requires detailed documentation to ensure that all tax deductions, payments, and returns are correct. Poor record keeping can lead to errors, penalties, or delays in refunds. This article explains what records you should keep for CIS, how long to keep them, and how accountants can help you stay compliant.

The Construction Industry Scheme requires both contractors and subcontractors to maintain proper financial records. These records help prove how much income was earned, what deductions were made, and what tax was paid to HMRC. Whether you are paying subcontractors or being paid as one, accurate records protect you during audits and ensure your CIS returns are completed correctly.

Why CIS record keeping is important

HMRC can request evidence of CIS transactions at any time, so it is your responsibility to maintain clear and up-to-date records. Good record keeping ensures that:

  • Tax deductions are calculated accurately.

  • Payments match what has been reported to HMRC.

  • Refunds or tax reliefs are processed quickly.

  • You avoid penalties for missing or incorrect information.

Failing to keep adequate CIS records can result in fines of up to £3,000.

Records contractors must keep

If you are a CIS contractor, you are responsible for verifying subcontractors, making deductions, and submitting monthly returns. You must keep records of all these activities, including:

1. Subcontractor verification details

You need to record:

  • Each subcontractor’s name, address, and Unique Taxpayer Reference (UTR).

  • Their verification number from HMRC.

  • The deduction rate applied (gross, 20%, or 30%).

This information proves that you verified each subcontractor correctly before making payments.

2. Payment records

For every payment made to a subcontractor, you must record:

  • The gross amount paid before deductions.

  • The cost of any materials supplied.

  • The amount of CIS tax deducted.

  • The net amount paid after deductions.

  • The date of payment.

These figures are used to complete your monthly CIS returns and provide accurate payment and deduction statements.

3. Monthly CIS returns

Keep copies of all CIS returns submitted to HMRC. Each return shows the total payments made and deductions withheld for that month. You must also record the submission reference number or receipt issued by HMRC as proof that you filed on time.

4. CIS payment and deduction statements

Contractors must provide subcontractors with a CIS statement every month within 14 days of the tax month end. You should retain copies of all statements issued, including:

  • Subcontractor details.

  • Gross payments.

  • Deductions made.

  • Payment dates.

These serve as evidence if HMRC queries your returns or a subcontractor disputes a deduction.

5. Business and accounting records

As well as CIS-specific information, you must also keep standard accounting records such as:

  • Invoices and receipts.

  • Bank statements and cheque stubs.

  • Payroll records if you employ staff.

  • VAT returns if registered.

Records subcontractors must keep

If you are a CIS subcontractor, you should maintain records that show your income and expenses throughout the year. These records are essential for completing your Self Assessment tax return and claiming any CIS refund due.

1. CIS statements from contractors

Keep every CIS statement you receive from contractors. Each statement shows how much you were paid and how much tax was deducted. HMRC uses this information to calculate whether you owe additional tax or are due a refund.

If a contractor fails to provide a statement, request one immediately, as you will need it for your tax records.

2. Invoices and payment records

Keep copies of all invoices you issue to contractors, along with records of when and how you were paid. This helps verify your income if HMRC requests evidence.

3. Expense receipts

You can claim allowable business expenses to reduce your taxable income. To do this, you must keep receipts or invoices for:

  • Tools and materials.

  • Work clothing and protective gear.

  • Fuel, mileage, and travel expenses.

  • Insurance and professional fees.

  • Training courses and trade memberships.

Keeping digital copies is acceptable, but they must be legible and include all details such as dates and supplier information.

4. Bank statements

Bank statements provide proof of income and expenses. HMRC may use them to cross-check your declared earnings, so they should always be kept and reconciled with your invoices and CIS statements.

5. Work contracts and correspondence

If you have written contracts with contractors, keep copies of them. They help confirm your working arrangements, rates, and terms of payment. Email confirmations or work orders also count as valid records.

How long to keep CIS records

HMRC requires both contractors and subcontractors to keep CIS records for at least three years after the end of the tax year they relate to. For example, records for the 2023–24 tax year (ending 5 April 2024) must be kept until at least 5 April 2027.

It is good practice to keep them for longer if possible, especially if there are ongoing disputes, audits, or refund claims.

Best way to store CIS records

You can keep CIS records either on paper or digitally. However, digital storage is often safer and easier to manage. Accounting software and cloud storage allow you to:

  • Save invoices, receipts, and CIS statements securely.

  • Generate reports automatically for tax returns.

  • Back up your records in case of data loss.

If you use CIS-compatible accounting software, such as Xero, QuickBooks, or Sage, it can automatically track payments, deductions, and returns, making compliance much simpler.

How accountants help with CIS record keeping

Accountants can take much of the stress out of CIS compliance by managing your records for you. They can:

  • Set up efficient systems for tracking CIS payments and deductions.

  • Reconcile subcontractor payments with HMRC returns.

  • Prepare monthly CIS submissions for contractors.

  • Use your records to complete Self Assessment or company tax returns.

  • Help you claim any CIS tax refund quickly.

They also ensure that your records meet HMRC’s audit standards, reducing the risk of fines or delays.

Example in practice

A small roofing contractor pays six subcontractors each month. By using accounting software, the contractor records every payment, automatically generates CIS statements, and submits monthly returns to HMRC. The subcontractors each receive electronic copies of their statements, and the contractor’s accountant keeps all records digitally for future reference.

At the end of the tax year, the subcontractors use their CIS statements to file their returns and claim refunds without any missing information or delays.

Conclusion

Keeping accurate CIS records is a legal requirement for both contractors and subcontractors. You should retain details of all payments, deductions, invoices, and statements for at least three years.

Good record keeping not only ensures compliance with HMRC but also helps you manage cash flow and claim tax refunds efficiently. With help from an accountant and the use of digital tools, you can keep your CIS records organised, accurate, and ready whenever HMRC requires them.