Subcontractor verification under the Construction Industry Scheme is the process by which a contractor confirms a subcontractor's CIS registration status with HMRC before making a payment, which determines the deduction rate to apply: 0% for Gross Payment Status, 20% for a registered subcontractor, or 30% for an unregistered subcontractor.

Verification is a legal obligation, not an optional check. A contractor who pays a subcontractor without verifying cannot rely on applying a 20% rate if HMRC later establishes the subcontractor was unregistered: the contractor remains liable for the difference between the 20% applied and the 30% that should have been deducted. Applying the wrong rate because of missing verification is treated as a contractor error, with the contractor responsible for making good the shortfall to HMRC.

From 6 April 2026, verification took on a second role as the foundation of the due-diligence duty introduced by Finance Act 2026. Re-verifying each subcontractor before each payment is one of three core steps a contractor must take to meet the “knew or should have known” standard that determines whether GPS can be revoked or a penalty under FA 2004 s.62A or s.62B applies. Contractors should log the verification reference number and the date of each verification check as contemporaneous evidence.

Once verified, the contractor receives confirmation of the subcontractor's status from HMRC: the verification reference number, the subcontractor's name and Unique Taxpayer Reference, and the applicable deduction rate. The contractor must then apply that rate to the labour element of each subsequent payment to that subcontractor. CIS deductions never apply to the materials element of an invoice.

  • HMRC CIS helpline: 0300 200 3210 (Monday to Friday, 8am to 6pm).
  • Deduction rates: 0% (GPS), 20% (registered), 30% (unregistered).
  • From April 2026: re-verification before each payment is a mandatory due-diligence step.
  • Record: retain the verification reference number and date for each check.

The verification process is explained in detail at how to verify subcontractors under CIS and why it matters. The deduction rates that verification determines are covered at CIS deduction rates: 20%, 30% and gross payment status explained.