em Learn about the Construction Industry Scheme (CIS)

Overview of the CIS scheme and how it works with Accounting.

  • Set up CIS in Accounting so sales and purchase invoices calculate the CIS deduction.

  • If you're a contractor, send monthly returns directly to HMRC and produce payment and deduction statements for your subcontractors ( also known as CIS vouchers).

  • If you're a subcontractor, record CIS for your customers and remain compliant

What you need to know

  • The Construction Industry Scheme (CIS) is a HMRC tax requirement for contractors and subcontractors in the construction industry. See www.gov.uk/what-is-the-construction-industry-scheme
  • If you're a contractor, you must register for the scheme.
  • Under CIS, contractors deduct money from a payments received from subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance.
  • If you're a subcontractor you don’t have to register, but deductions are taken from your payments at a higher rate if you're not registered.
  • If you want to import your own chart of accounts, you must do this before you activate CIS. Once activated, we create additional CIS ledger accounts and disable the import chart of accounts feature.
  • If you're using Sage Accounting, you can record CIS as either a subcontractor, contractor or both.
  • Learn how to use the CIS feature if you currently enter CIS into the system manually

How it works in Accounting

  1. Set up CIS and use special ledger accounts when recording transactions so CIS is deducted automatically.

  2. Enter opening balances if you have just migrated from another system

CIS for contractors

  1. Identify which contacts are subcontractors so the correct deductions are applied to your transactions.
  2. Identify when subcontractors need to use reverse charge VAT.
  3. Use the link from the CIS tab within the subcontractor's supplier record to verify their status with HMRC.

  4. When recording purchase invoices, select a CIS ledger account and we'll automatically deduct the CIS withheld amount and record the withheld tax correctly when processing payments.
  5. Create and submit your CIS 300 Monthly Return to HMRC.
  6. Create individual monthly payment and deduction statements (CIS vouchers) to send to your subcontractors.

CIS for subcontractors

  1. Identify which contacts are contractors so the correct deductions are applied to your transactions.
  2. Identify when contractors need to use reverse charge VAT.
  3. When recording sales invoices, select a CIS ledger account and we'll automatically deduct the CIS amount withheld by your contractors.

  4. Create a CIS Suffered report, over any given period, to see track the deductions made on your behalf by your contractors.