If you work in construction, you’ve probably already heard something has shifted with CIS from April 2026. Most headlines have focused on HMRC tightening its grip on fraud in supply chains, but in practice the message for contractors is simpler: expect to show more clearly who you’re working with and what checks you’ve done.
Nothing here is about overhauling how most businesses operate. It’s more about tightening up the areas that often get left a bit loose in real life, particularly paperwork and subcontractor due diligence.
We’re looking at this from a day-to-day compliance point of view and focusing on what we’re already seeing businesses need to get in order.
HMRC is looking harder at supply chains
The biggest change is HMRC’s increased focus on what happens across the supply chain, not just at subcontractor level.
In simple terms, HMRC now has more scope to challenge a business if it believes they were involved in a chain where tax fraud was taking place and the contractor either knew or should have picked up warning signs.
This isn’t a new concept in tax. Similar thinking has existed in VAT for years. The difference now is that it’s being applied more directly in CIS.
For most contractors, this doesn’t mean you’re suddenly responsible for everything a subcontractor does. But it does mean the “we didn’t know” argument carries less weight if the signs were there and nothing was done about them.
What HMRC will actually expect to see
In practice, HMRC is rarely interested in theory. They tend to look at what was done when a subcontractor was taken on and paid.
That usually comes down to a few simple questions:
- what checks were done before work started
- whether those checks were recorded properly
- whether anything unusual was followed up
- whether decisions were consistent across subcontractors
This is where many businesses fall short. Checks might be done in practice, but not always documented properly. That gap becomes a problem later if HMRC asks for evidence.
Due diligence is becoming the real focus
Due diligence under CIS has always existed, but it’s now getting more attention in practice.
At the onboarding stage, most contractors already verify subcontractors through HMRC and collect basic business information. That part is usually fine.
Where things tend to drift is after onboarding.
In real projects, things change. Bank details get updated, payment arrangements shift, and sometimes subcontractors start operating in a way that doesn’t quite match expectations.
None of that automatically means anything is wrong, but it does mean you need to stay alert.
Typical things that should prompt a second look include:
- sudden changes to bank accounts without a clear reason
- inconsistent company details or missing paperwork
- payment requests that don’t match agreed terms
- anything that doesn’t feel consistent with the setup
Most of the time there’s a reasonable explanation. The issue is whether anyone actually asks the question.
Record keeping is where many businesses get caught out
If there’s one area that causes problems later, it’s record keeping. We regularly see businesses that have done the right checks but have no evidence when asked later.
HMRC doesn’t just want to know that you followed CIS rules; they want to see how you did it. That usually means keeping things like:
- HMRC verification confirmations
- Onboarding details for subcontractors
- Copies of business information
- Notes of concerns raised and how they were resolved
- Correspondence where decisions were made
It doesn’t need to be complicated, but it does need to be consistent. If it isn’t written down, it effectively didn’t happen from a compliance perspective.
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Gross payment status still needs careful management
Gross Payment Status (GPS) remains one of the more valuable parts of CIS for subcontractors because it allows payments without deductions.
But it comes with higher expectations around compliance.
HMRC has always taken a closer interest in businesses with GPS, and that hasn’t changed. If anything, enforcement has become more active.
If serious compliance issues are identified, GPS can be removed, which can have an immediate cash flow impact.
From a contractor’s point of view, this reinforces the need for consistent verification and monitoring throughout the relationship.
CIS returns and admin shouldn’t be overlooked
One of the quieter but still important changes relates to CIS return obligations.
There has historically been some flexibility around inactivity, but HMRC has tightened expectations again.
In practical terms, contractors need to be clear on when returns are due and who is responsible for submitting them. Missing returns, even where no subcontractors were paid, can still lead to penalties.
It’s not usually complicated, but it’s easy to overlook when work is busy.
Public sector work needs a closer look
There are also changes affecting payments involving local authorities and public bodies.
The key point is that treatment can vary depending on the organisation and contract structure. It’s not something to assume.
If you’re working in the public sector, it’s worth checking each arrangement rather than applying a blanket CIS approach.
What contractors should actually do now
Most businesses don’t need to panic or rebuild systems. But it is a good time for a review, especially if CIS processes haven’t been looked at recently.
In practice, the businesses that stay on top of this tend to:
- Keep onboarding checks consistent
- Store evidence of checks properly
- Question unusual changes in behaviour or payments
- Keep CIS filing responsibilities clear
- Review subcontractor relationships periodically
It’s not about bureaucracy. It’s about tightening the parts that slip when work gets busy.
How BBK Accounts can help
CIS compliance is usually straightforward in principle, but it becomes time-consuming when you are managing multiple projects and subcontractors.
We work with construction businesses across the UK to keep CIS processes on track, from subcontractor verification and monthly returns to reviewing systems for HMRC readiness.
If you are unsure whether your current processes would stand up to scrutiny, or you simply want a second opinion, it is worth having them reviewed.
Contact us today to find out how we can help.
Frequently Asked Questions
Not directly. You’re not automatically responsible for what a subcontractor does elsewhere in their business. The risk comes in if there were clear warning signs connected to a payment and nothing was done to follow them up. Reasonable checks, properly recorded, are what protect you here.
There’s no single rule that covers every scenario, but in practice you want records to outlast the period HMRC could realistically come back and ask questions. Many businesses keep at least the standard tax record-keeping period as a baseline, then a bit longer for anything tied to GPS or a subcontractor relationship that raises concerns at any point.
Maybe not, but don’t just assume that. HMRC tightened up its expectations around inactivity, so if you think a period qualifies, check the current rules first or get confirmation from your accountant and don’t just skip the return and hope it’s fine.
