CIS for subcontractors — how does it actually work?

Good news first: the 20% isn't a final tax — it's an advance payment towards his tax and National Insurance, and it's set against his total bill when he files his Self Assessment return, so if too much was deducted he'll get a refund. He doesn't have to register as a subcontractor, but it's strongly in his interest: registered subcontractors have 20% deducted, while unregistered ones have 30% taken off. Registration is straightforward through HMRC and means less money held back each month. One more thing to know: the deduction applies to labour, not materials, so he should make sure his invoices split the two out clearly.