How We Recovered a £2,000 CIS Tax Refund a Subcontractor Didn't Know They Were Owed

A subcontractor who thought his tax was "just sorted"

When Marco (not his real name — we have changed identifying details for this article) first came to us, he was not looking for a refund. He was a sole-trader bricklayer based in West London, working for two main contractors across the capital, and he just wanted someone to "sort out" his Self Assessment.

He had been filing his own returns for years using a cheap online tool. Each year he would type in his income, type in the CIS figures from his deduction statements, and accept whatever number the software produced. He had never had a complaint from HMRC, never missed a deadline, and assumed everything was correct.

He was wrong — and he was owed money.

The problem hiding in the deduction statements

When we reviewed Marco's records, the first thing we asked for was his CIS deduction statements from every contractor he had worked for over the last two tax years. These statements show exactly how much each contractor deducted and sent to HMRC on his behalf.

What we found was a pattern that is more common than most subcontractors realise:

• ◢One contractor was deducting at 30% — the higher, unregistered rate — even though Marco had been registered for CIS for years.
• ◢The other contractor was deducting at the correct 20% rate, so the difference was not obvious unless you compared the two.
• ◢Because the deductions had been made and sent to HMRC, Marco's Self Assessment software simply accepted them as fact and built them into his final tax position.

The result was that, over two tax years, Marco had paid roughly £2,000 more in CIS deductions than he actually owed. The money had already gone to HMRC. His software did not flag it. He never queried it. And because he kept getting "no issues" from HMRC, he assumed the numbers were right.

Why this happens so often

CIS deductions are an advance payment towards your tax bill, not the bill itself. At the end of the year, your Self Assessment reconciles everything: your actual profit, your actual tax and Class 4 National Insurance, and the total CIS that was deducted on your behalf.

If the deductions are higher than your true liability, you are owed a refund. If they are lower, you owe more. In theory, the Self Assessment process corrects this automatically.

In practice, three things go wrong:

1. ◢Subcontractors trust the software. Most cheap filing tools take the CIS figures you enter at face value. They do not check whether the deduction rate applied was the correct one for your registration status.
2. ◢Contractors make verification errors. A contractor who verifies a subcontractor once and then does not re-verify can end up applying the wrong rate for years, especially if the subcontractor's status changed or the contractor's records were not updated.
3. ◢Nobody compares the statements to the verification. The only way to catch an over-deduction is to check that the rate on each deduction statement matches the rate HMRC actually assigned to you at the time. Most subcontractors never do this.

What we did

Once we spotted the discrepancy, the recovery process was straightforward but detailed:

1. ◢We confirmed Marco's correct CIS status with HMRC for each month in question, proving he should have been on the 20% rate throughout.
2. ◢We recalculated the correct deductions for every month the 30% rate had been wrongly applied, across two tax years.
3. ◢We amended both Self Assessment returns to reflect the correct CIS position, with a clear reconciliation showing the overpayment.
4. ◢We submitted the amendments to HMRC and dealt with any follow-up queries on his behalf.

The total overpayment came to just under £2,000. HMRC processed the amendment and issued the refund.

How long did it take?

From the day Marco came to us to the day the refund hit his bank account was around ten weeks. Most of that time was HMRC processing the amendment — the actual work on our side took a matter of days once we had all the deduction statements and verification records.

The key was having the right paperwork. Because Marco had kept his deduction statements (even though he had never properly checked them), we could trace exactly what had been deducted and when. Without those statements, the refund would have been far harder to prove.

The lesson for every CIS subcontractor

If you are a subcontractor working under CIS, do not assume that because HMRC has not contacted you, your deductions are correct. The scheme puts the responsibility for the right deduction rate on the contractor — but it is your money that is at stake if they get it wrong.

Three simple habits will protect you:

• ◢Keep every deduction statement from every contractor, every month. These are your proof of what was deducted.
• ◢Check the rate on each statement against your current CIS registration. If it says 30% and you are registered, something is wrong.
• ◢Get a specialist to review your position at least once a year — not just file the return, but actually look at whether the deductions make sense for your income and your status.

A £2,000 refund is not unusual. We have recovered smaller and larger amounts for subcontractors across London, and in almost every case the client had no idea they were owed anything until someone went looking.

Want us to check your CIS position?

If you are a subcontractor and you have never had your CIS deductions properly reviewed, book a free review with us. We will look at your deduction statements, check your registration status, and tell you honestly whether you are owed money — before you pay us a penny.

Most overpayments go back two or three years. Some go back further. The only way to know is to look.

This case study is based on a real client engagement. Identifying details have been changed. Figures are illustrative of the type of refund we recover. This article is for general guidance only and does not constitute formal tax advice — your own refund, if any, depends on your specific circumstances.