CIS checks for labour providers
You are paid under CIS, and you pay others. The new rules look at both sides. Check the firms in your own chain, and show the contractors who pay you that you check.
Why the new rules reach you
Since 6 April 2026 HMRC can act where a business knew or should have known that payments it made or received were connected with fraudulent evasion of tax. For a labour provider that means both sides: the firms you pay, and the contractors who pay you.
If HMRC decides you knew or should have known, it can cancel your gross payment status at once, with no reapplying for 5 years, make you liable for the lost tax and charge a penalty of 30% of it, which can also reach your directors. Source: Tackling Construction Industry Scheme fraud (policy paper, 26 November 2025).
Your defence is your record
HMRC's manual calls "knew or should have known" an objective test: what a reasonable business in your position would have spotted. It also says supply chain fraud commonly involves one or more contrived transactions. Source: HMRC manual CISR85060: 'knew or should have known' principles.
HMRC says the measures should not affect compliant businesses that do the due diligence needed. Checks you have written down, with the date and what you were told, are how you show you could not have known.
Check the firms in your own chain
- Verify each subcontractor with HMRC before you first pay them, and keep the reference (What you must do as a CIS contractor: verify subcontractors).
- Run the free company check on each limited company you pay: how new it is, overdue filings, director changes and what it does.
- Ask whether they pass the work on, and to whom, and write down the answer.
- Keep the record with your CIS records for at least 3 years after the end of the tax year (What you must do as a CIS contractor: record keeping).
Show the contractors who pay you
The contractors who pay you now face the same question about you. Make their checks easy: keep your filings up to date on Companies House, file your monthly returns on time, and keep a written checking process you can show them. Run the company check on your own company number to see what they see.
What this check cannot tell you. We cannot see a company's CIS registration or gross payment status. Only you can, by verifying them with HMRC before you pay.