If you’re running a construction business that deals with subcontractors, keeping detailed Construction Industry Scheme (CIS Compliance) records isn’t just a good practice, it’s an HMRC requirement. Failure to keep proper CIS records can result in expensive fines, stressful HMRC audits, and unnecessary business disruption.
In this guide, we’ll clearly explain what CIS records you need to keep, how long you should keep them, and provide practical tips to make the process easier for your business.
📂 Why CIS Record-Keeping is Essential
HMRC regularly conducts CIS compliance checks. Without accurate records, you risk:
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HMRC penalties
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Loss of CIS gross payment status
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Additional tax and NIC demands
Clear CIS records protect your business and provide essential proof in any compliance review.
✅ What CIS Records Do You Need to Keep?
Here’s exactly what records HMRC expects contractors to maintain:
1. Subcontractor Verification Records
Before paying any subcontractor, you must verify their CIS status.
Keep records of:
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Verification numbers from HMRC
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Dates of verification
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Subcontractor details, including their UTR (Unique Taxpayer Reference)
2. Monthly CIS Returns
You must submit monthly CIS returns detailing payments to subcontractors.
Keep copies of:
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Submitted CIS returns
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Acknowledgement from HMRC (proof of submission)
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Any amendments or corrections
3. Payment and Deduction Statements
Provide subcontractors with monthly deduction statements.
Keep copies clearly showing:
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Subcontractor name and UTR
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Gross amount paid (including separate labour/material costs)
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Amount deducted
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Payment dates
4. Invoices and Contracts
Maintain clear records of:
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Invoices from subcontractors (labour and materials itemised separately)
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Signed contracts or agreements
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Details of variations or amendments to contracts
5. Payment Records
Clearly document all payments, including:
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Dates of payments
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Amounts deducted and paid to HMRC
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Evidence of payments to subcontractors and HMRC (e.g., bank statements)
📆 How Long Must CIS Records be Kept?
HMRC requires CIS-related records to be kept for at least 6 years from the end of the tax year they relate to.
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If HMRC requests these records during this period, you must provide them promptly.
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Keeping digital, organised records ensures easy retrieval.
🖥️ Digital vs Paper Records
HMRC accepts both digital and paper-based records, but increasingly expects digital storage for accuracy and ease.
Recommended digital tools include:
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Xero, Sage, or QuickBooks with integrated CIS modules.
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Cloud storage (e.g., Google Drive or Dropbox) for easy access and secure backup.
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Specialised CIS compliance software to automate record-keeping and reporting.
🚩 Common CIS Record-Keeping Mistakes
Avoid these frequent errors that often lead to HMRC problems:
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Incomplete or missing subcontractor verifications (leading to 30% deductions).
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Incorrectly calculated deductions due to poor invoice tracking.
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Lost monthly deduction statements, causing disputes with subcontractors.
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Inaccurate labour/material splits, leading to incorrect CIS deductions.
🔍 What Happens if HMRC Checks My Records?
If HMRC conducts a compliance review, they’ll request:
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Copies of your monthly CIS returns.
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Verification details for subcontractors.
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Proof of deductions and payments made to HMRC.
Keeping accurate, well-organised records can quickly satisfy HMRC and prevent costly follow-ups or penalties.
✅ CIS Record-Keeping Checklist
Use this quick checklist to ensure compliance:
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Subcontractor verification records complete
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Monthly CIS returns filed on time (by 19th each month)
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Monthly CIS statements sent to subcontractors
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Invoices clearly separating labour and materials
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Payments recorded and traceable to bank records
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Records securely stored for 6 years
💡 Need Professional Help Staying CIS Compliant?
At Thomas Emlyn Ltd, we specialise in helping construction businesses manage CIS compliance smoothly, minimising admin, reducing risk, and keeping you on the right side of HMRC.
We can help you:
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Set up automated CIS record-keeping.
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Handle monthly CIS returns accurately and on time.
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Manage HMRC CIS audits or compliance checks.
📞 Book a discovery call here — and remove the headache of CIS compliance permanently.
📌 Final Thoughts
Proper CIS record-keeping isn’t just about avoiding penalties; it’s about ensuring your construction business operates efficiently, confidently, and profitably. Set up robust record-keeping processes now to protect your business in the future.
