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HMRC CIS letters: build an evidence pack before correcting a return
HMRC has written to some contractors about possible incorrect CIS deduction rates for 2025–26. Here is a practical records check before you respond.
Who should act now
HMRC’s 18 September 2026 guidance says it is sending letters to contractors it believes may have used an incorrect rate for subcontractor payments between 6 April 2025 and 5 April 2026. A letter explains the suspected issue, how to correct it and, where relevant, how to work out tax due. The new service can be used by a company officer or an authorised agent, among others.
Receiving a letter is not the same as HMRC having reached a final decision. The guidance says HMRC will review the information submitted and decide whether payment is needed. It also says a recipient should still make a disclosure, including when they disagree with HMRC’s findings.
Assemble the period evidence
Start with the letter and its CFSS reference, the business name and UTR. Then gather the CIS monthly returns for the affected 2025–26 tax months, subcontractor verification results, payment records and deduction statements. Match each disputed payment to the accounting entry and the bank or payment record. Keep a short explanation for any difference rather than changing a return before you can show what was actually paid.
HMRC’s 17 September Agent Update tells agents to check payment, material and deduction figures against payroll, invoice or accounting records before each monthly return. It also highlights recording materials separately where they are included on an invoice. Use those checks to identify whether the issue is a rate decision, an omitted payment, a materials figure or a transcription error. This preparation checklist is TaxMirror’s practical suggestion, not an extra HMRC filing requirement.
Decide what the evidence supports
For each affected subcontractor, record the payment date, gross amount, materials amount where relevant, rate used, deduction and amount paid. Note how the subcontractor was verified and retain the supporting invoice or contract record. If the figures support HMRC’s concern, calculate the underpayment from the records and use the service described in the letter. If you think the return is correct, preserve the calculation and documents that explain why, then set out that position through the same process.
Do not use a later payment to hide an earlier reporting error. Check the return period and the correction route against current HMRC CIS guidance. A corrected figure should be traceable from source payment to return and, where applicable, to the deduction statement and payment to HMRC.
Keep the response traceable
Save the submitted disclosure, calculations, uploaded documents and any acknowledgement with the underlying CIS records. HMRC’s guidance says it aims to contact respondents within 28 working days, but that is a service aim rather than a guaranteed outcome. If an agent responds, retain evidence of the authorisation to make the disclosure for the business.
This guide does not determine whether a deduction rate was correct or calculate a penalty. Where records conflict or the letter’s proposed correction is unclear, ask the person responsible for the CIS return or a suitably qualified adviser to resolve the facts before submitting figures.
Sources
- HM Revenue & Customs — Report Construction Industry Scheme (CIS) contractor monthly return errors if you’ve received a letter from HMRC (2026-09-18)
- HM Revenue & Customs — Issue 147 of agent update (2026-09-17)