Construction Subcontractors Will Be Told Their Tax Return Was Corrected

HMRC is about to start writing to construction subcontractors with a letter that, in HMRC's own words, will explain “why the correction has been made”. From 10 August 2026 up to and including 31 December 2026, subcontractors in the Construction Industry Scheme may get an email or letter where HMRC believes there is an error in the CIS deductions on their Income Tax Self Assessment return. That past-tense wording sits beside a second, more tentative line, “why we think the correction is needed”. HMRC's CIS guidance does set out an ask-first sequence, evidence or an amended claim by a deadline before HMRC corrects it, but only in its limited companies section, which covers reclaiming deductions through payroll. For sole traders and partners, that same guidance page sets out no equivalent published sequence. The campaign was added on 6 August 2026 to HMRC's page for checking that multi-channel contact from the department is genuine.

The catch sits in the law the announcement does not mention. The gov.uk page names no statutory power at all, and the taxpayer's rights differ depending on which one is being used. Where HMRC uses its correction power, section 9ZB of the Taxes Management Act 1970 provides that a correction takes effect unless the taxpayer gives notice rejecting it “before the end of the period of 30 days beginning with the date of issue of the notice of correction”. A postal delay or a fortnight away therefore eats a window that is short to begin with. Section 9ZB(3) also provides that no such correction may be made more than nine months after the day the return was delivered, or, where the correction is required in consequence of an amendment under section 9ZA, the day that amendment was made, while the campaign runs to 31 December 2026, so section 9ZB cannot be the route for all of it. An enquiry under section 9A or a discovery assessment under section 29 carries different rights and different time limits. HMRC says the letter itself will explain what to do if the information is wrong.

The number under correction is not one the subcontractor produced. A contractor deducts 20 per cent from a registered subcontractor's payments, or 30 per cent if they are not registered, and pays it to HMRC as an advance payment towards that subcontractor's tax and National Insurance. The subcontractor's only evidence is the payment and deduction statement the contractor must give them within 14 days of the end of each tax month, a document they cannot compel the contractor to produce, leaving them to ask the contractor for replacement copies and, only if that contractor has stopped trading, to write to HMRC instead. Limited company subcontractors reclaim their deductions through payroll on an Employer Payment Summary, and gov.uk warns: “Do not try to claim back through your Corporation Tax return - you may get a penalty if you do.” So this campaign lands largely on sole traders and partners: the self-employed groundworker or bricklayer with a shoebox of statements.

1. HMRC's own wording is past tense: the letter explains why the correction “has been made”. If the correction is already made before the taxpayer is asked, is that a reasonable use of HMRC's powers?
2. The figure being corrected is money a contractor withheld, evidenced by a statement the subcontractor cannot compel. Who is hit hardest by a 30 day clock that starts on the date the notice was issued rather than the day it arrives, and is that fair?
3. What should a subcontractor do the day one of these letters lands, and what would make this process fairer? Do you have a client whose plans this would change? If so, please give as much colour and detail as possible.