Key facts
- Errors on CIS returns can be corrected on a subsequent return using an earlier period adjustment (EPA).
- You should correct errors as soon as possible — do not wait until the end of the tax year.
- Common errors include wrong deduction rate, incorrect materials figure, and wrong subcontractor details.
- If you over-deducted, you may need to refund the subcontractor the excess and adjust your HMRC payment.
- HMRC may issue penalties if errors are deliberate or if you fail to correct known mistakes.
Why Errors Occur
CIS returns involve multiple data points — subcontractor details, payment amounts, materials costs, and deduction calculations. With 12 returns a year and potentially multiple subcontractors on each, errors are not uncommon. Common causes include:[1]
- Applying the wrong deduction rate (e.g. using 20% when verification said 30%)
- Entering an incorrect materials figure
- Reporting the wrong gross payment amount
- Entering incorrect subcontractor details (name, UTR, NI number)
- Reporting a payment in the wrong tax month
- Forgetting to include a subcontractor on the return
How to Correct Errors
The method for correcting errors depends on the type and severity of the mistake:[2]
1. Earlier Period Adjustment (EPA)
The most common correction method is the earlier period adjustment, which allows you to adjust figures on a subsequent CIS return:
- Identify the error and calculate the correct figures
- On your next CIS return, include an EPA showing the adjustment
- The adjustment increases or decreases the total deductions reported for the current period
- Your payment to HMRC for the current period reflects the adjusted total
2. Contacting HMRC Directly
For certain errors, you need to contact HMRC rather than using an EPA:
- Wrong subcontractor details (name, UTR) — HMRC needs to correct their records so the subcontractor gets proper credit
- Duplicate returns — if you accidentally submitted two returns for the same period
- Errors affecting a previous tax year — EPAs can only adjust within the current tax year
Contact the CIS helpline on 0300 200 3210 or write to HMRC explaining the error.
Timeliness matters: Correct errors as soon as you discover them. Leaving errors uncorrected can compound over time, make your records harder to reconcile, and may be viewed less favourably by HMRC if they carry out a compliance check.
Correcting Over-Deductions
If you deducted too much from a subcontractor (e.g. applied 30% instead of 20%), you should:[2]
- Refund the excess deduction to the subcontractor
- Issue a corrected payment and deduction statement
- Report the correction on your next CIS return as an EPA
- Reduce your payment to HMRC by the amount of the over-deduction
Worked Example: Over-Deduction Correction
| Item | Original (Error) | Correct | Adjustment |
|---|---|---|---|
| Labour payment | £5,000 | £5,000 | — |
| Deduction rate | 30% | 20% | — |
| Deduction amount | £1,500 | £1,000 | −£500 |
| Paid to subcontractor | £3,500 | £4,000 | +£500 refund |
The contractor refunds the subcontractor £500 and reduces the next HMRC payment by £500 via the EPA.
Correcting Under-Deductions
If you deducted too little (e.g. applied 20% when the subcontractor was unmatched at 30%), you should:
- Report the correction on your next CIS return as an EPA
- Pay the shortfall to HMRC with your next monthly payment
- Decide whether to recover the shortfall from the subcontractor (this is a commercial decision)
Tip: If you under-deducted, you are liable to HMRC for the full amount that should have been deducted, regardless of whether you can recover it from the subcontractor. This underlines the importance of getting verification right before making payments.
Correcting Wrong Subcontractor Details
If you reported the wrong name, UTR, or NI number for a subcontractor, the subcontractor may not receive credit for their CIS deductions. This can cause problems when they file their tax return.[2]
To correct this:
- Contact HMRC on the CIS helpline (0300 200 3210) and explain the error
- Provide the correct details along with the return period and tax month
- HMRC will update their records to ensure the subcontractor gets proper credit
Correcting Wrong Materials Figures
If you reported the wrong materials figure (too high or too low), the deduction will have been calculated incorrectly. Correct this via an EPA on the next return:
- If materials were overstated: the deduction was too low — report the additional deduction due
- If materials were understated: the deduction was too high — refund the subcontractor and report the reduction
Penalties for Errors
HMRC distinguishes between genuine mistakes and deliberate errors:[3]
- Genuine errors corrected promptly: unlikely to attract penalties beyond any late payment interest
- Careless errors (lack of reasonable care): may attract penalties of up to 30% of the understated amount
- Deliberate errors: can attract penalties of 70% to 100% of the understated amount
Voluntary disclosure (telling HMRC about the error yourself) typically results in lower penalties than if HMRC discovers the error during a compliance check.
Frequently Asked Questions
How do I correct a mistake on a CIS return?
You correct errors by making an adjustment on a subsequent CIS return using the earlier period adjustment (EPA) facility. You report the corrected figures and the difference is adjusted against your current period’s deductions. For serious errors, you may need to contact HMRC directly.
What if I used the wrong deduction rate?
If you deducted at the wrong rate, correct it as soon as possible. If you over-deducted (e.g. 30% instead of 20%), refund the excess to the subcontractor and adjust the next CIS return. If you under-deducted, you may owe the difference to HMRC.
Can I amend a CIS return after the deadline?
You cannot amend a return that has already been submitted. Instead, you make corrections on a subsequent return using the EPA mechanism. The adjustment is reported alongside the current month’s data.
What if the subcontractor’s name or UTR was wrong?
Contact HMRC to correct the subcontractor’s details on the original return. Incorrect details can prevent the subcontractor from getting credit for deductions suffered, so this should be corrected promptly.
Further Reading
- Monthly CIS Returns (CIS300) — how to file returns correctly
- Calculating CIS Deductions — getting calculations right first time
- CIS Penalties for Late Filing & Payment — the full penalty framework
- HMRC CIS Compliance Checks — what to expect during an inspection
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