HMRC are writing to Construction Industry Scheme (CIS) contractors who may have applied the wrong tax deduction rate to subcontractor payments in 2025-26 and have introduced a new online form to report and correct errors.
HMRC are sending letters to Construction Industry Scheme (CIS) contractors they believe may have applied an incorrect tax deduction rate to subcontractor payments between 6 April 2025 and 5 April 2026.
HMRC guidance, published on 18 September 2026, confirms that each letter:
- Explains why HMRC think an error may have occurred.
- Sets out how to correct the error.
- Where appropriate, helps the contractor work out any additional tax due.
HMRC have introduced a new Online form for agents and contractors to use to respond. HMRC state that contractors should make a disclosure even where they believe their CIS returns were correct.
Contractors who have not received a letter but wish to make a disclosure are not able to use the new form. They should instead use the HMRC CIS online service to correct a CIS return or contact the CIS general enquiries helpline.
When to use the new online form
The form should be used to:
- Report any tax that may have been underpaid.
- Give details of any other errors that need correcting.
- Where the taxpayer disagrees with HMRC's findings, explain why they believe the original return was correct.
Who should use the form
The form may be completed by:
- An individual.
- A designated member of a limited liability partnership.
- A trustee of a trust.
- A personal representative of an estate.
- An officer of a company.
- An agent, provided they are authorised to act on behalf of the business or company.
Information required
Before starting the form, contractors or agents will need:
- The reference number from the HMRC letter, which begins ‘CFSS'.
- Details of any tax underpaid.
- The number of subcontractors included in the disclosure.
- The months for which CIS returns need to be corrected.
What happens next
HMRC will review the disclosure and aim to make contact within 28 working days. A disclosure should still be made even where the contractor disagrees with HMRC's findings.
Useful guides on this topic
CIS: Contractors and Subcontractors
What is the Construction Industry Scheme? Who does it apply to? How does it work?
Penalties: CIS (Construction Industry Scheme)
When are Construction Industry Scheme (CIS) penalties charged and how much are they?
Construction Industry Contractors and Subcontractors: Tax Overview
What expenses can contractors and sub-contractors claim for tax purposes? How is their income taxed? Are there special tax and accounting rules for contractors and sub-contractors? What are the VAT rules for contractors?
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