HMRC steps up compliance crackdown on CIS contractors

HM Revenue & Customs (HMRC) has ramped up compliance activity targeting construction firms operating under the Construction Industry Scheme (CIS), signalling tougher enforcement across the sector.

The increase in checks is focusing heavily on employment status assessments and the correct application of CIS rules — particularly around subcontractor payments and claims for plant and materials. As usual, small and medium-sized contractors are increasingly coming under scrutiny during this process.

In the first half of the 2025–26 tax year, HMRC recovered more than £15 billion through compliance activity across all sectors, with construction a key area of attention. The figures reflect HMRC's continued efforts to clamp down on incorrect worker classification and CIS reporting errors.

Recent cases highlight the risks facing contractors. In one instance, a firm that believed its subcontractors were legitimately self-employed — and had formal contracts in place — saw HMRC reclassify the workers as employees for tax and National Insurance purposes. Such decisions can leave contractors liable for significant back payments.

Simon Brookes, Managing Director of Mineral Payroll warns, "HMRC’s increased compliance activity is a clear signal that construction remains firmly in the spotlight. Contractors must ensure their CIS processes, employment status assessments and record-keeping are robust. Getting it wrong can be costly, so now is the time for firms to review their arrangements and seek advice from our experts.”

Please contact us on 0330 052 5200 or email sales@mineralpayroll.com for more information.