Contractor took 20% but HMRC shows no record: getting your refund anyway

By Patrick Roper ACA, ICAEW chartered accountant. Last reviewed 1 November 2026. Figures next checked by 1 February 2027.

The law is on your side. Regulation 9(10) of the CIS regulations says that where a contractor makes a deduction but does not pay it to HMRC, it is treated as having been paid when your tax is calculated, and HMRC's own manual (CISR17100) confirms it. You claim the deduction on your return as normal, explain the position in the additional-information box, and attach the evidence that the deduction was made. The contractor's failure is HMRC's problem to pursue, not yours to pay twice.

How this happens

Every month a contractor must send HMRC a return listing each subcontractor paid and the tax deducted, pay that tax over, and give you a payment and deduction statement within 14 days of the end of the tax month. When the contractor skips the first two steps, HMRC's record of you shows nothing, or shows less than you were deducted. You find out when you file your return and the refund does not arrive, or when HMRC writes to say it cannot match the figure. The same question comes up on Reddit most months ("my boss hasn't paid my tax, £4,300"), and accountants see it too: one AccountingWEB thread concerns a £10,000 deduction HMRC said the contractor never paid.

What the law says

The regulation is short. Regulation 9 of the Income Tax (Construction Industry Scheme) Regulations 2005 deals with what happens when a contractor fails to pay deductions over. Paragraph (10) provides that the amount is treated as paid when the subcontractor's own liability is calculated. HMRC's manual at CISR17100 puts it in one sentence: "If a contractor makes a deduction from a subcontractor payment but does not pay the sum over to HMRC, it will be treated as having been paid when calculating the subcontractor's liability." The Low Incomes Tax Reform Group summarises the effect: this is HMRC's problem to sort out with the contractor, and you will not have to pay the tax again.

How to claim it

1. Ask the contractor for the statements first. They are required to produce them. Ask in writing so there is a record of the request.
2. Gather your own evidence. Invoices showing the gross amount, bank statements showing the net amount received, and any message in which the contractor mentions the deduction. The gap between gross and net at 20% (or 30%) is the deduction.
3. Write to HMRC for the figures it holds, if the contractor will not help. HMRC no longer gives these out over the CIS helpline; the Low Incomes Tax Reform Group's page carries the address.
4. Claim the full deduction on your return. Enter what was actually deducted from you, not what HMRC's record shows. Use the additional-information box to explain that the contractor deducted the tax and appears not to have paid it over, that the figures are from your own evidence, and that you rely on regulation 9(10).
5. Expect a letter. A mismatch means a person reviews the return. Answer the letter with the evidence, by the date on it.

What HMRC may say, and the answer

HMRC sometimes replies that it has no record of the deduction and asks you to prove it. That is the evidence step above, not a refusal. HMRC may also ask whether you were genuinely self-employed on the job; if you were on the books as an employee, CIS did not apply and the tax position is different. Where the contractor has become insolvent, the regulation still applies: your credit does not depend on HMRC recovering the money.

If you want it handled

This is the one CIS case where the explanation on the return matters as much as the figures. A return with the regulation cited, the evidence listed and a named chartered accountant on it tends to be resolved in one exchange of letters. Our fee is £249, paid when you approve the return, and answering HMRC's questions about a return filed by the desk is included. You can also do all of the above yourself at no cost through HMRC's online service; the regulation applies either way.