Making the transition from recording CIS tax withheld manually to using the CIS feature

  • How to start using the CIS feature if you're already entering CIS transactions into Accounting without using this new functionality.

Important

  • Once you have activated the CIS feature, you can report on CIS deductions, send statements to your suppliers and submit the CIS 300 return to HMRC. Only invoices that have been entered using the new CIS ledger accounts and CIS enabled customer and supplier contacts are included on these reports and returns.
  • If you are part way through a month and have been recording your CIS tax withheld before the new functionality was introduced you should continue doing this until the end of the period (5th of the month) before you start to use the new functionality.

How to start using CIS 

It’s important you don’t have a mixture of payments recorded outside of the CIS feature and payments entered using the CIS feature in the same reporting period. This is because the new reports and returns will not include CIS transactions that have not been entered using the new functionality.

For example, if you have already entered CIS invoices for June and would like to start using the feature from July 2020, it's likely that you'll have invoices that won't be paid until the middle of July.

To manage this:

  1. Continue to enter invoices for the rest of the period using your current method.
  2. At the end of period (e.g. July 5th), make sure paid CIS invoices are accounted for using your current method.

  3. Any invoices still outstanding at the end of the period (July 5th) will need to be included on your next return, using the new functionality. To do this:

    1. Reverse each outstanding invoice with a credit note.
    2. Allocate the credit note to each outstanding invoice.
    3. Set up CIS (step 4) to make sure your ledger accounts and contacts are set up correctly.
    4. Re-enter each outstanding CIS invoice using a CIS labour ledger account.
  4. When you're ready to start entering outstanding invoices for July, you can now set up CIS.

    Although you can activate CIS at any point, it might be advisable to wait until you have processed all your CIS transactions for the previous month to prevent any data entry errors, before you do so.

  5. Once CIS is set up, you can start entering new CIS transactions. Learn how to create a CIS invoice.

Next steps