title: "8 days: The CIS changes that could make you personally liable for your subcontractors' tax fraud" slug: cis-director-liability-april-2026 date: 2026-03-29 description: "From April 6, HMRC can pursue UK construction directors personally for supply chain CIS failures. NIL returns become mandatory. GPS loss means a 5-year ban. Most small builders still don't know." tags: [CIS, HMRC, construction, tax, director liability, April 2026] sector: construction

8 days: The CIS changes that could make you personally liable for your subcontractors' tax fraud

From April 6, 2026 — eight days from today — the Construction Industry Scheme undergoes its most significant tightening in a decade.

Most small builders, contractors and main contractors aren't aware of what's changing. Construction accountants only began writing about this in December. The industry press has been focused on Huws Gray and working-at-height enforcement. CIS has gone largely under the radar.

That gap is your window to get ahead of it.

What's actually changing on April 6

There are four distinct changes, and each one has real teeth.

1. NIL returns become mandatory

From April 6, you must submit a monthly CIS return to HMRC even in months where you made zero payments to subcontractors.

This rule was paused during the COVID period and is now being reinstated. The practical impact: if you had a quiet month in June with no subcontractor work, you still need to log into HMRC CIS Online and file a NIL return by the 19th of the following month.

Miss it: automatic penalty. Miss it repeatedly: escalating penalties on a points-based system.

Most small firms will know from experience how easy it is to forget a routine filing in a busy month. This is that, but every month, for life.

Action required: Set a monthly calendar reminder for the 15th of each month — 4 days before the deadline — to check whether you've made any subcontractor payments and file accordingly.

2. Gross Payment Status loss = 5-year ban (was 1 year)

Gross Payment Status (GPS) allows subcontractors to receive payments without deductions (the standard 20% or 30% deduction). For most CIS contractors, GPS is essential to cash flow.

From April 6, if HMRC determines that GPS was obtained fraudulently or is being abused, the suspension period increases from 12 months to 5 years.

Five years without GPS means:

• Every payment you receive has 20–30% withheld at source
• You're treated as a higher-risk supplier by main contractors
• Your cash flow takes a hit that can be business-ending for small firms

HMRC's position: they've been lenient on GPS for too long. The change signals a significant hardening.

For main contractors: You also need to understand this. If a subcontractor you work with loses GPS after April 6, you must immediately switch to the deduction regime. Failing to do so makes you liable for the tax.

3. Supply chain liability — the Kittel principle comes to CIS

This is the change with the most dramatic implications, and the one almost no SME construction business knows about.

From April 6, HMRC can apply what's known as the Kittel principle to CIS transactions. Named after a European Court of Justice ruling on VAT fraud, the principle is this:

If you "knew or should have known" that a transaction was connected to tax fraud, you can be made liable for the full tax loss — plus a 30% penalty.

In practice, this means:

• If HMRC investigates a subcontractor you've used and finds CIS fraud
• And HMRC determines you "should have known" about the irregularity
• They can recover the full tax loss from you — not the fraudulent subcontractor
• Plus add a 30% penalty on top
• And this can come from directors personally (see below)

HMRC has budgeted to recover £205 million in year one from this measure alone.

That number tells you how seriously they're taking this.

4. Director personal liability

This connects directly to the supply chain liability change. Under the new framework, if a company is found liable for CIS supply chain fraud and the company cannot pay, HMRC can pursue directors personally.

This isn't theoretical. HMRC has used director personal liability extensively in VAT fraud cases since Kittel. They are now applying the same playbook to CIS.

Ask yourself:

• Do you know if all your subcontractors have valid GPS status right now?
• When did you last check HMRC's CIS verification database?
• Have you documented your subcontractor due diligence process?

If the answer to any of these is "no" or "a while ago," you have a gap.

The near-zero awareness problem

Construction accountants — the people who should be warning their clients — only started publishing content on these changes in December 2025. Most small builders don't read trade press. They find out about regulatory changes from their accountant, their trade body newsletter, or when HMRC writes to them.

HMRC writes to you after the breach. That's not the right order.

What "knowing or should have known" means in practice

HMRC's own guidance gives examples of what creates constructive knowledge:

• Unusually high margins — if a subcontractor quotes significantly below market rate, that's a flag
• Multiple bank account changes — fraud patterns often involve redirecting payments; if a sub has changed bank details recently without clear reason, document your verification steps
• No verifiable business presence — can you confirm the subcontractor's registered address is genuine?
• Verbal-only arrangements — HMRC expects written contracts with CIS details

The standard isn't "did you know?" — it's "would a reasonable business in your position have spotted the red flags?"

Five things to do before April 6

1. Re-verify all active subcontractors through HMRC CIS Online Not just at onboarding. Do it now. Print or save the verification results with a datestamp.

2. Check your NIL return history Go back 12 months. Have you filed returns in every month since you registered for CIS? If there are gaps, call HMRC's CIS helpline (0300 200 3210) before April 6 — voluntary disclosure before the deadline is treated more favourably than being caught.

3. Document your subcontractor due diligence process One page is enough. What checks do you do when you take on a new sub? When do you re-verify? Who is responsible? The existence of a documented process is a defence. The absence of one is an aggravating factor.

4. Review recent bank account change requests Go through your payment records for the last 6 months. Has any subcontractor changed their bank account details? Did you document why? Re-verify those accounts now.

5. Check with your accountant If your accountant hasn't mentioned the April 6 CIS changes yet, bring this article to them. Some smaller accountancy practices serving construction SMBs haven't fully briefed their clients.

The rhetorical questions worth sitting with

Do you know if all your subcontractors have valid GPS status right now? Not when they started working for you. Right now.

When did you last check HMRC's CIS verification database? Verification at onboarding is no longer sufficient. HMRC expects you to monitor this.

Have you submitted NIL returns for quiet months in the last year? If not, you're already in arrears before the new rules even take effect.

What about if you use 1–2 subcontractors?

The changes apply regardless of scale. Whether you're a sole-trader builder with two subbies or a main contractor with 50, the CIS framework covers you. The personal liability risk is, if anything, higher for smaller firms — because there are fewer corporate layers between you and direct HMRC pursuit.

ComplianceAlert for construction businesses

These four CIS changes are exactly the kind of update that falls through the cracks between accountant newsletters and trade press.

ComplianceAlert monitors HMRC CIS enforcement data, GOV.UK guidance updates, and regulatory announcements in real time. When something like the April 6 package lands, our construction subscribers get a plain-English summary of what's changed, what they need to do, and when.

We also send monthly NIL return reminders — automatically, before the 19th of each month.

---

8 days until HMRC start enforcing. Are your subcontractors verified?

Take our free 3-minute Compliance Score quiz — 20 questions, instant results: 👉 compliancealert.co.uk/compliance-score

Start your free trial: 👉 compliancealert.co.uk/construction — 14 days free, no card required.

8 days until HMRC start enforcing. Are your subcontractors verified?