Top Tips for Keeping Records to Simplify Your CIS Tax Return

/Published:3rd February 2026/inContractors, Employees, Limited Company, Running a business
Accounting Wise - tips for keeping records to simplify your CIS tax return

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When it comes to the Construction Industry Scheme (CIS), solid record-keeping is not just admin. It underpins your tax compliance, protects you from HMRC penalties, and ensures you do not miss out on legitimate refunds or deductions.

CIS operates on tight reporting rules. Even small gaps in your records can trigger delays, incorrect tax calculations, or unwanted attention from HMRC. On the flip side, well-organised records make life far easier, whether you are a contractor submitting monthly CIS Returns or a subcontractor completing your annual Self Assessment.

Accurate CIS records also support wider business decisions. They help you track cash flow, reconcile payments received versus deductions suffered, and provide clear evidence if HMRC ever queries your figures. In short, good records give you control as well as compliance.

What this post will help you with

In this section, we break CIS record-keeping down into clear, practical steps. You will learn:

  • Exactly which CIS records contractors and subcontractors must keep
  • How long HMRC requires CIS records to be retained
  • Digital tools and systems that simplify CIS paperwork
  • The most common record-keeping mistakes that lead to penalties or lost refunds

By the end, you will have a clear, stress-free roadmap for keeping your CIS records accurate, organised, and ready whenever you need them.

Pro tip: HMRC requires CIS contractors and subcontractors to keep CIS records for at least three years after the end of the tax year. In practice, we recommend keeping them for six years, especially if you operate through a limited company or have fluctuating CIS deductions. This can be invaluable if HMRC carries out a compliance check or retrospective review.

Helpful resource: For official guidance on what records must be kept and why, see CIS record-keeping requirements on GOV.UK.

Why Good Records Matter for CIS

Good record-keeping under the Construction Industry Scheme (CIS) is not just about ticking a compliance box. It has a direct impact on your tax position, cash flow, and overall peace of mind. Whether you are a contractor or a subcontractor, the quality of your records often determines how smooth or stressful the CIS process becomes.

  • Compliance – requires contractors to keep CIS records for at least three years after the end of the tax year. These include payment and deduction records, invoices, subcontractor verification details, and monthly CIS Returns. If HMRC carries out a compliance check and you cannot produce the required documents, you may face penalties, backdated assessments, or enforcement action.
  • Accuracy – Accurate records are essential for submitting correct CIS Returns and Self Assessment tax returns. Missing invoices, incorrect deduction figures, or lost CIS statements can lead to errors that trigger HMRC queries. Even small discrepancies can delay processing, result in amended returns, or cause unexpected tax bills.
  • Refunds and tax efficiency – For subcontractors, good records often mean the difference between overpaying tax and receiving a meaningful refund. Keeping clear evidence of allowable expenses such as tools, travel, protective clothing, training, and insurance reduces your taxable profit. The more complete your records, the more confidently you can claim what you are entitled to.
  • Time-saving and reduced stress – Well-organised CIS records save time throughout the year, not just at tax deadlines. Instead of searching for paperwork at year-end or during an HMRC review, you can file returns quickly and respond to questions with confidence. This also makes it easier for your accountant to act on your behalf and spot potential tax savings.
Pro tip: Although HMRC’s minimum requirement is three years, many accountants recommend keeping CIS records for at least six years. This provides protection if HMRC opens a longer enquiry and gives you valuable historical data for budgeting, forecasting, and business planning.

Useful resources:  

What Records Contractors Need to Keep

If you are a contractor operating under the Construction Industry Scheme (CIS), keeping clear and complete records is a legal requirement, not a nice-to-have. HMRC expects contractors to maintain detailed evidence of all subcontractor payments and deductions so that monthly CIS Returns are accurate and fully supported.

These records are critical not only for meeting your ongoing reporting obligations, but also for demonstrating compliance if HMRC carries out a CIS review or compliance check.

Records contractors must keep

  • Subcontractor verification details – Confirmation from HMRC of each subcontractor’s tax status, whether they are taxed at 20%, 30%, or have Gross Payment Status. This should include the verification reference number issued by HMRC and the date the check was completed.
  • Monthly CIS Returns submitted to HMRC – Copies of every CIS Return filed by the 19th of the month, including nil returns where no subcontractors were paid. These returns form the backbone of your CIS compliance history.
  • CIS deduction statements issued to subcontractors – Monthly statements showing gross labour payments, CIS deductions, and net amounts paid. Subcontractors rely on these statements to complete their Self Assessment returns and reclaim tax, so accuracy here is essential.
  • Invoices received from subcontractors – Invoices should clearly show the work carried out, labour charges, and any materials supplied. Keeping the breakdown helps ensure CIS deductions are applied correctly to labour only.
  • Payment and bank records – Evidence of both gross and net payments made to subcontractors, including bank statements that match the amounts reported on your CIS Returns. This is often one of the first areas HMRC reviews.

Why this matters

Keeping these records accurate and up to date helps ensure:

  • Smooth and accurate CIS Return submissions every month
  • A reduced risk of late filing penalties or compliance action
  • Confidence and clarity during an HMRC compliance check
  • Stronger relationships with subcontractors who depend on correct deduction statements
Pro tip: Store CIS records digitally wherever possible. Accounting platforms such as The Balance App and Xero,  allow you to keep everything organised, backed up, and easy to share with your accountant.

More information: CIS record-keeping for subcontractors – GOV.UK.

What Records Subcontractors Need to Keep

As a subcontractor, your ability to reclaim the correct amount of tax under the Construction Industry Scheme (CIS) depends entirely on the quality of your records. HMRC requires you to report all CIS income and allowable expenses on your Self Assessment tax return, or on your Corporation Tax return if you operate through a limited company.

Missing or incomplete documents can reduce your refund, delay repayment, or trigger questions from HMRC. Keeping clear, well-organised records ensures you can prove what tax has already been deducted and confidently claim every expense you are entitled to.

Key records subcontractors should keep

  • Monthly CIS deduction statements – These are provided by each contractor you work for and show your gross labour payments, CIS tax deducted, and net pay. They are the most important documents when reclaiming overpaid tax, so keep every statement safely.
  • Invoices issued to contractors – Copies of all invoices you send should clearly show the work completed, dates, and amounts charged. These figures should match what contractors report on their CIS Returns, helping avoid discrepancies.
  • Receipts for allowable expenses – Keep evidence for costs such as tools, protective clothing, training, public liability insurance, materials, and fuel. These expenses reduce your taxable profit and can significantly increase your CIS refund.
  • Mileage records – If you use your own vehicle for work, keep a mileage log showing the date, destination, and purpose of each journey. HMRC allows mileage claims at the approved rates, currently 45p per mile for the first 10,000 miles and 25p thereafter.
  • Bank statements – Your bank statements provide proof of income received from contractors and help match payments to invoices and CIS deduction statements. These are often requested during HMRC checks.

Why these records matter

  • They allow you to prove CIS deductions already suffered when claiming a refund
  • They maximise your repayment by ensuring every allowable expense is claimed
  • They protect you if HMRC opens an enquiry into your income or expenses
Pro tip: Keep both digital and backup copies of your CIS records. Cloud-based accounting tools allow you to photograph receipts on your phone and store them securely, reducing the risk of lost paperwork and missed claims.

Helpful resource: CIS record-keeping guidance for subcontractors on GOV.UK

Top Tips for Keeping Records for CIS Tax Returns

Staying on top of your CIS records does not have to be complicated. A few simple habits can make a big difference to your accuracy, refunds, and stress levels, especially when deadlines or HMRC checks roll around.

  1. Go digital – Use cloud accounting software or mobile apps to scan receipts, store invoices, and track payments as you go. Digital records are secure, searchable, and far easier to share with your accountant than paper files. Popular tools also create automatic backups, reducing the risk of lost documents.
  2. Separate business and personal finances – Open and use a dedicated business bank account for CIS income and expenses. This makes it much easier to match payments to invoices, spot missing deductions, and avoid confusion when completing your CIS Returns or Self Assessment.
  3. Keep a monthly routine – Do not wait until the tax year ends. Set aside time each month to review your CIS records, check deduction statements, and reconcile payments. This aligns neatly with when contractors issue CIS statements and helps catch errors early.
  4. Organise records by contractor – If you work with multiple contractors, keep separate folders or digital tags for each one. This makes it much easier to match invoices, payments, and CIS deduction statements and reduces the risk of reporting the wrong figures.
  5. Track expenses in real time
    Log expenses as you incur them rather than saving receipts in a wallet or toolbox. Real-time tracking means fewer lost receipts and ensures you claim every allowable expense, maximising your CIS tax refund.
  6. Store HMRC correspondence safely – Keep copies of all letters, emails, verification responses, and notices from HMRC. These documents are often needed to resolve disputes, confirm tax status, or support your position during a review.
  7. Back up everything – Use cloud storage, external hard drives, or secure accounting platforms to back up your CIS records. This protects you against accidental deletion, device failure, or physical damage to paper records.

Following these tips consistently can turn CIS record-keeping from a last-minute panic into a routine part of running your business, saving time, reducing errors, and putting you in a stronger position if HMRC ever asks questions.

CIS Returns for Contractors and Sub-contractors

 CIS Tax Returns

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How Good Records Simplify Your CIS Return

Keeping well-organised records is the single most effective way to remove stress from the Construction Industry Scheme (CIS). Whether you operate as a contractor or a subcontractor, accurate paperwork saves time, reduces risk, and often leads to better financial outcomes across the board.

Clear records also mean fewer surprises. When your figures are backed up by consistent documentation, you are far less likely to face delays, amendments, or follow-up questions from HMRC.

  • For contractors
    • Submitting monthly CIS Returns is significantly easier when invoices, CIS deduction statements, and payment records are complete and easy to access.
    • Accurate records ensure deductions are reported correctly each month, reducing the risk of penalties, late filing charges, or unnecessary compliance checks.
    • Well-maintained records help build trust with subcontractors, who rely on timely and accurate deduction statements to reclaim tax and manage their own cash flow.
  • For subcontractors
    • Completing your Self Assessment tax return is faster and more straightforward when CIS statements, invoices, and expense receipts are already organised.
    • Good records ensure you claim every allowable expense, from mileage and tools to protective clothing and insurance, which can substantially increase your CIS refund.
    • Confidence in your paperwork makes it easier to respond quickly and accurately if HMRC raises a query or opens an enquiry.
Pro tip: Treat record-keeping as a monthly habit rather than a year-end task. Updating your files after each payment or expense keeps your CIS records current and makes deadlines far less daunting when they approach.

Common Record-Keeping Mistakes to Avoid

Even with the best intentions, both contractors and subcontractors often fall into record-keeping habits that complicate CIS Returns and reduce tax refunds. Understanding the most common mistakes, and knowing how to avoid them, can save you time, money, and unnecessary stress.

  1. Throwing away receipts or not requesting them
    Every missing receipt represents a lost expense claim. Over the course of a year, this can add up to hundreds or even thousands of pounds in unclaimed tax relief. Fix: Always request receipts and store them immediately, ideally using a digital capture tool such as Xero, Pandle or The Balance App
  2. Forgetting to collect CIS deduction statements
    CIS deduction statements are essential for proving tax already deducted at source. Without them, HMRC may delay processing your return or query your figures.

    Fix: Chase contractors promptly if a statement is missing and keep copies, both digital and paper, organised by month and contractor.

  3. Mixing personal and business transactions
    Using a single bank account for personal and business spending makes it harder to identify allowable expenses and increases the risk of disputes during an HMRC review.

    Fix: Open a dedicated business bank account so income and expenses are clear, traceable, and easy to reconcile.

  4. Only updating records once a year
    Leaving record-keeping until tax season often leads to rushed calculations, missing paperwork, and overlooked expense claims.

    Fix: Update your CIS records monthly, ideally after each payment run or job completion, to keep everything accurate and current.

  5. Relying on paper records without backups
    Paper documents can be lost, damaged, or fade over time. Without backups, you may struggle to provide evidence during an HMRC compliance check.

    Fix: Keep digital backups of all CIS records. Cloud accounting systems provide secure storage, automatic backups, and instant access when needed.

Pro tip: Treat your CIS records like financial insurance. Consistent, organised record-keeping protects you from HMRC penalties, speeds up tax refunds, and saves hours of admin at year-end.

Why Work with an Accountant

Even with strong record-keeping habits, the Construction Industry Scheme (CIS) can still feel complex. Monthly deadlines, changing deduction rates, and detailed HMRC rules all add layers of responsibility that can trip up even experienced contractors and subcontractors.

This is where working with a specialist accountant makes a real difference. An accountant does not just submit forms, they act as a second set of expert eyes, ensuring everything adds up and works in your favour.

An accountant can:

  • Check records for accuracy – Ensuring invoices, CIS deduction statements, and payment records all align, reducing the risk of errors or HMRC queries.
  • Ensure all deductions and expenses are included – Making sure nothing is overlooked, so you never miss out on a legitimate claim or allowable expense.
  • File returns on time – Handling monthly CIS Returns and Self Assessment deadlines to help you avoid late filing penalties and unnecessary stress.
  • Maximise refunds and minimise liabilities – Applying allowances, reliefs, and expenses correctly to improve cash flow and prevent overpaying tax.
  • Improve your record-keeping process – Advising on systems, software, and routines that save time and keep you organised throughout the year.

At Accounting Wise, we support both CIS contractors and subcontractors across the UK. From setting up simple CIS record-keeping systems to managing monthly returns and year-end refunds, we take the complexity out of compliance so you can focus on your work.

Final Thoughts on Tips for Tips for Keeping Records to Simplify Your CIS Tax Return

Keeping records for CIS tax returns does not need to be difficult. By going digital, staying organised, and updating your records regularly, you can save time, reduce errors, and make the entire CIS process far more straightforward.

Whether you are filing monthly CIS Returns or reclaiming tax as a subcontractor, good records put you in control and reduce the risk of costly mistakes.

Need help with keeping records for CIS tax returns, or want an accountant to handle everything for you?

Contact Accounting Wise today and let us make sure your CIS returns are accurate, compliant, and stress-free.

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Contractors and subcontractors must keep CIS records for at least three years after the end of the tax year. Many accountants recommend keeping records for six years in case HMRC carries out a compliance check or retrospective enquiry.

Subcontractors should keep CIS deduction statements, invoices issued to contractors, receipts for allowable expenses, mileage logs, and bank statements showing income received. These are required to complete a Self Assessment or Corporation Tax return accurately.

CIS contractors must keep subcontractor verification details, monthly CIS Returns, CIS deduction statements issued, subcontractor invoices, and payment records. These support monthly reporting and demonstrate compliance with HMRC rules.

It is very difficult. CIS deduction statements are the primary evidence HMRC uses to confirm tax already deducted. If statements are missing, HMRC may delay or reduce your refund until the information is verified.

Accounting software is not mandatory, but it is strongly recommended. Digital tools make it easier to store records securely, track deductions, and submit accurate returns. They also reduce the risk of lost paperwork and errors.

Allowable expenses typically include tools, protective clothing, training, insurance, materials, fuel, and business mileage. Keeping clear receipts and records is essential to ensure these costs are accepted by HMRC.

Incomplete or inaccurate records can lead to HMRC penalties, delayed refunds, amended tax returns, or compliance checks. In some cases, HMRC may estimate figures, which can result in higher tax bills.

Yes. A CIS-experienced accountant can check your records, file returns on time, maximise refunds, and ensure compliance with HMRC rules. This is especially valuable if you work with multiple contractors or have complex expenses.

Glossary of Key CIS Record-Keeping Terms

Construction Industry Scheme (CIS) – A UK tax scheme that applies to construction work. Contractors deduct tax from subcontractor payments and pass it to HMRC.

CIS Contractor – A business or individual that pays subcontractors for construction work and is responsible for verifying them, making deductions, and submitting monthly CIS Returns.

CIS Subcontractor – A self-employed individual or business paid by a contractor under CIS. Tax is usually deducted at source before payment.

CIS Deduction – The tax withheld by a contractor from a subcontractor’s labour payment, typically at 20% or 30%, unless the subcontractor has Gross Payment Status.

Gross Payment Status (GPS) – A status granted by HMRC allowing subcontractors to be paid in full without CIS deductions, provided they meet strict compliance and turnover conditions.

CIS Deduction Statement – A monthly statement issued by a contractor to a subcontractor showing gross pay, CIS tax deducted, and net pay. This is essential evidence when reclaiming tax.

Monthly CIS Return – A report contractors must submit to HMRC by the 19th of each month, detailing payments made to subcontractors and any CIS deductions taken.

Nil CIS Return – A monthly CIS Return submitted when no subcontractors were paid in that tax month. These are still required to remain compliant.

Subcontractor Verification – The process of checking a subcontractor’s tax status with HMRC before making payments, confirming whether deductions apply and at what rate.

Allowable Expenses – Legitimate business costs that subcontractors can deduct from income when calculating taxable profit, such as tools, protective clothing, insurance, training, and mileage.

Mileage Allowance – A tax-free rate allowed by HMRC for business travel using a personal vehicle, currently 45p per mile for the first 10,000 miles and 25p thereafter.

Self Assessment Tax Return – The annual tax return used by self-employed subcontractors to report income, expenses, and CIS tax already deducted.

Corporation Tax Return (CT600) – The tax return used by limited company subcontractors to report profits and claim CIS deductions suffered.

Compliance Check – An HMRC review of a contractor’s or subcontractor’s records to ensure CIS rules have been followed correctly.

Record Retention Period – The minimum time CIS records must be kept. HMRC requires at least three years after the end of the tax year, though many accountants recommend six years.

Digital Record-Keeping – Storing CIS records electronically using accounting software or cloud storage, making them easier to organise, back up, and share.

CIS Online Service – HMRC’s digital system used by contractors to verify subcontractors and submit monthly CIS Returns.
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