HMRC is writing to Construction Industry Scheme (CIS) contractors where it believes the wrong deduction rate may have been applied to payments made to subcontractors during 2025/26.
HMRC’s new guidance applies to contractors who receive a letter concerning deductions made between 6 April 2025 and 5 April 2026. The letter explains why HMRC believes an error may have occurred and, where appropriate, helps the contractor calculate any additional tax due.
Businesses receiving one of the letters should use HMRC’s online form to explain any errors and calculate the underpaid tax. Importantly, HMRC says a response should still be made where the contractor believes its original returns were correct; the form can be used to explain why there is no error. The online form is specifically for businesses that have received one of the targeted letters. Contractors who discover an unrelated CIS return error without receiving a letter should instead use the normal CIS online service to make the correction.
HMRC says it will review information submitted through the new service and aims to respond within 28 working days.