CIS returns filed wrong for years: how to get the money back from HMRC

Two different things go wrong, and they get confused with each other.

The first is when you are the subcontractor. Contractors deduct 20 per cent, or 30 per cent if you were never properly verified, and that cash goes to HMRC against your company’s tax. For it to come back, HMRC has to be told what was suffered through your payroll filings for each tax year. If nobody did that, the deductions exist on paper and nowhere useful. Your corporation tax bill arrives in full as though none of it ever happened.

The second is when you are the contractor. Your monthly CIS300 is supposed to reflect what you actually paid and deducted in that tax month, running from the 6th to the 5th. If materials were treated inconsistently, or a subcontractor was paid at the wrong rate, or a month was estimated and never corrected, the returns stop matching reality. HMRC then has nothing to check your side against.

Companies doing both at once, which is most of them above £500k, end up with errors on both sides compounding across four or five years. By the time anyone looks, the HMRC account is a long list of balances that bear no relation to what the company actually owes or is owed.

Almost everyone starts in the wrong place. They go back through their own records, build a spreadsheet of what they think they are owed, and send HMRC a figure. HMRC has no reason to agree with a number that does not match its own records, so the claim goes nowhere and six months disappear.

We start inside the HMRC portal. What is the PAYE account showing year by year. What corporation tax periods are open, and what is sitting unpaid against each. What CIS returns were actually accepted, and for which months. What VAT balances are hanging around unexplained. Until you can see HMRC’s version, you are guessing at the gap.

That reading usually tells you three things quickly. It tells you which years are genuinely in credit. It tells you which returns are missing entirely, because the gaps show up as nothing rather than as an error. And it tells you whether HMRC has already adjusted a claim downwards, which it has had the power to do on these returns since April 2021 where it cannot match a claimed deduction to evidence.

Only then is it worth building your own figure, because now you are building it to explain a difference rather than to assert one.

HMRC will not release money against returns that are wrong or missing. As of 6 April 2026 you need all the relevant PAYE, CIS and corporation tax returns in before you can claim a repayment, which simply makes explicit what was true in practice already. HMRC says so in its guidance on claiming a refund of CIS deductions as a limited company.

So the clean-up runs in this order.

• Correct the monthly contractor returns. Errors after submission can be sorted through the CIS helpline on 0300 200 3210, by filing a corrected return, or in writing, and the helpline is usually the fastest route for a single month.
• Get the payroll filings right for each affected tax year, so the deductions suffered are actually reported against the company.
• Bring the corporation tax returns up to date, including any year where the figures were built on the wrong deduction numbers.
• Then, and only then, make the repayment claim. You claim for a tax year once it has ended, online for the last six years and by post for anything older.

Skipping to the last step is the single most common reason these cases drag. Every month spent chasing a claim that was never going to be processed is a month the money stays where it is.

HMRC uses the deductions in a set order. Overdue PAYE goes first, then corporation tax. Whatever is left you can take as a refund, or point at VAT or a corporation tax bill that is coming.

That order matters for planning, because it means the cash you get back is often much smaller than the number you were owed. If three years of PAYE arrears are sitting there, the credit clears them silently and you are left wondering where it went. Knowing that in advance changes how you talk to your bank and how you price the next job.

Timing is the other thing to be straight about. These claims are not quick. Accountants report waits of several months on offsets, and HMRC will sometimes ask for the deduction statements as proof part way through. Keep every statement your contractors gave you. If you cannot produce them, request duplicates now rather than when HMRC asks.

Meanwhile, the liabilities you do owe still have due dates. We would rather agree a position with HMRC on the balance owed while a claim is being worked through than have a debt letter arrive on a company that is, on the real numbers, in credit.

Recovery is a one-off. The returns are monthly, and whatever process produced four years of wrong filings will produce a fifth unless something changes.

Three things usually fix it. Verify every subcontractor before the first payment, not after, because a 30 per cent deduction applied by default is cash you then have to chase back. Split materials properly on every invoice, since only materials the subcontractor directly paid for sit outside the deduction. And reconcile the CIS and PAYE accounts at the same time each quarter rather than discovering at year end that the two have drifted apart again.

We also push construction clients towards being ready for the scrutiny that comes with bigger contracts. One client needed an audit for work on Royal Air Force and other large projects, which we held in our Luton office with the auditor and the client in the room, and it turned up further issues that had been sitting quietly. Alongside that we arrange a discounted Croner subscription so HR, employment contracts and safety policies are in place when someone asks to see them.

Clean filings are what make the money recoverable next time. They are also what stop the question arising.