This guide gives a brief introduction to the Constructions Industry Scheme (CIS) and how to use the CIS feature in QuickBooks Online.
If you’re already using CIS, and you’ve been using workarounds, learn about all the new changes here.
What is CIS?
CIS (short for the Construction Industry Scheme) is a scheme set up by HM Revenue and Customs (HMRC) to collect tax from people working in the construction industry. Businesses using the scheme need to deduct money from subcontractors’ payments which then go to HMRC as part of their tax and National Insurance obligations.
Contractors are responsible for calculating and deducting the payments owed to HMRC on behalf of a subcontractor. When you turn on CIS in QuickBooks, we use the information you give us to calculate the CIS withheld.
Before you can turn on and use CIS in QuickBooks Online, make sure you sign up for the scheme on the HMRC website.
How to use CIS in QuickBooks Online
Not sure where to begin? Here's a quick checklist with links to our help articles to get you off the ground.
Step 1. Turn on CIS
This will allow QuickBooks to calculate your CIS deductions, track CIS withheld or suffered and create reports for HMRC. Here's how to turn on CIS in QuickBooks.
Step 2. Add a contractor or subcontractor
Learn how to add contractors and subcontractors, as well as make changes to their employee details.
Step 3. Create CIS transactions
Make sure to record payments you make to contractors and subcontractors, as well as the payments you receive from them.
Step 4. Submit a CIS return to HMRC
Next, it's time to submit a CIS return to tell HMRC about any payments that you've made to your contractors or subcontractors.
Step 5. Record CIS payments made to HMRC
Remember to record any payments you make to HMRC after you submit a return. This will show in your reports that you've paid taxes owed to HMRC, and allow you to match and categorise transactions in QuickBooks so that you books balance at the end of the year.
Step 6. Run CIS reports
Time to run your reports. There are three reports available for CIS in QuickBooks: CIS Contractor Monthly Statement (300), CIS Payment and Deduction statement and the CIS Suffered Summary. Here's how you can access and run CIS reports in QuickBooks.
Step 7. Record deductions suffered
This is a breakdown of CIS deductions paid to HMRC. Follow these steps to record deductions suffered in your QuickBooks.
Step 8. Unfile CIS return
If you need to, here's how you can unfile a CIS return.
