When CIS is deducted from you
A contractor pays you less the CIS they deducted and pays that part to HMRC. The money that arrived is recorded as a payment. The part they kept is recorded as Tax withheld at source and shown as Paid to HMRC for the firm.
Tax withheld at source is offered only on an invoice to a customer whose Customer type is Principal contractor, and not where the job’s kind of work has Construction work unticked. A customer of that type needs no VAT number. Without one, invoices to them charge VAT as usual. The Rate starts at your Deduction rate in Settings under Tax, and can be changed.
CIS is deducted from labour, and from the travel and subsistence paid with it. The materials figure on the contractor’s statement goes in Materials on their statement. Left empty, it is worked out from the invoice: each part line comes out at its cost, or whole where no cost is recorded, and expense lines stay in.
Every tax month, from the 6th to the 5th
The Withheld at source screen lists what each customer kept back, one tax month at a time. A payment counts in the tax month of the day it arrived. The month’s totals come first, then each customer and each payment.
A contractor who deducts from you in a tax month owes you a payment and deduction statement by the 19th. Their total goes in with Add their figure, and any difference from yours is shown.
Download CSV gives your accountant one row per payment. Each row holds these figures:
- The rate
- The gross, ex VAT
- The materials excluded
- The basis, which is the gross less those materials
- The deduction
When you pay subcontractors
On the bigger plans, with your CIS role set to Contractor or Both, a supplier can be paid as a subcontractor. The supplier’s card then holds their CIS rate, UTR, Verification number and Verified on. Reverse charge records that you account for the VAT on their bills.
On a subcontractor’s bill, Mark it paid works out the deduction from the lines at their CIS rate. You see the gross, the materials, the deduction, any reverse charge VAT and what to pay. The deduction is never typed or edited. Correcting one means voiding the bill and entering it again.
Each line on the bill is given a CIS kind, and a line with none stops the payment. Materials are left out of the deduction at their cost, what the subcontractor paid for them. A materials line with no cost typed is left out whole. The kinds are:
- Labour
- Materials
- Plant hire
- Consumables
- Fuel
- Travel fuel
- Prefabrication
- Not construction
Statements to subcontractors, and nil months
On the bigger plans, each subcontractor you paid in a tax month is emailed their payment and deduction statement between the 10th and the 19th. The statement is a PDF in your business name, with your Employer reference on it. Statements wait until the reference is set. HMRC wants one by the 19th for each subcontractor you deducted from.
On the CIS deducted from subcontractors screen, a statement not yet sent can go by hand with Send statement once the tax month is over. If the month’s payments change after it went, the screen shows Changed since it was sent and offers Send again while the month still has a payment. A subcontractor with no email shows No email on their card and is not sent one.
The same screen lists every tax month since your first subcontractor, up to two years back. While your CIS role is Contractor or Both, a month that ended with no payment shows the date its nil return is due. HMRC wants a nil return for that month, or notice that you have stopped using subcontractors.
What stays with you and your accountant
Nothing is filed with HMRC. Verifying subcontractors and filing the CIS300 monthly return or a nil return stay with you or your accountant. So does deciding whether somebody is employed or self-employed.
On the bigger plans, the CIS deducted from subcontractors screen totals each subcontractor’s gross, materials and deduction for every tax month. Those are the three figures the monthly return asks for. Download CSV gives them as a file.
