The Construction Industry Scheme (CIS) is for contractors and subcontractors working in construction. The scheme is a method of withholding tax and national insurance contributions and passing them to HMRC. Contractors are responsible for calculating and deducting the payments due to HMRC on behalf of a subcontractor.
By turning on this feature QuickBooks will calculate your CIS deductions, track your CIS withheld or suffered amounts and create the necessary reports for HMRC.
Creating a CIS transaction in QuickBooks is much like creating a normal transaction. With CIS turned on, we'll calculate everything for you.
To record paying a subcontractor, create a bill or expense. When creating your transaction, select your subcontractor, QuickBooks will use their CIS rate to calculate the CIS to deduct (CIS withheld). If materials are a part of this transaction, you can add these on here too.
Don't forget to enter the full (gross) amounts for each item. QuickBooks will do the calculations for you.
Receiving payments from contractors
Subcontractors will create an invoice or sales receipt when receiving money from a contractor. Select the contractor from the top of the page and QuickBooks will use your CIS rate to calculate the CIS to deduct (CIS suffered). If you're charging for materials on this job, you can add these too.
Creating transactions using bank feeds
It's possible to match or add CIS transactions using your bank feeds. When downloading bank data we'll try to find a match with any transactions you created manually. If there isn't one you can add it.
- Select Banking.
- Select a row to review the details. It will expand to show you the info we need to add or match your transaction.
- Choose a transaction type. CIS can be calculated on bills and expenses (when paying subcontractors) or sales receipts and deposits (when receiving payments from contractors).
- Select a subcontractor or contractor from the drop down. This lets us know it's a CIS transaction.
- Click Add. We will calculate and apply the CIS to this transaction for you.
To turn on CIS:
- Click the Gear icon > Company Settings (or Account and Settings depending on what you see).
- Click Advanced.
- Select Construction Industry Scheme (CIS).
- Enter your info.
What happens when you turn on CIS?
Once you turn on CIS:
- We create the CIS accounts you need to track CIS.
- You’ll see the CIS centre under Taxes.
- We’ll start asking you for more information about your contractors and subcontractors.
- We'll track your CIS deductions as you create CIS transactions.
- We add CIS reports and statements
Please know, you can't turn CIS off. Don't worry, you can stop using it anytime you like. We keep the accounts and reports around so your records are straight.
To add a contractor:
- In the navigation bar, go to Sales > Customers > New customer.
- Fill in the fields in the Customer information window.
- Select is CIS contractor and enter their UTR number in the Tax info tab.
- Click Save. Your contractor will appear in the customer list.
- Select the contractor name to see information about them. From the contractor record, edit the profile to make changes, or click New transaction to enter a new invoice/sales receipt for this contractor.
To add a subcontractor:
- In the navigation bar, go to Expenses > Suppliers > New supplier.
- Fill in the fields in the Supplier information window.
- Select is CIS subcontractor.
- Enter info in the CIS Information tab. HMRC will tell you all the information you need when you verify your subcontractor, including their CIS rate.
- Click Save. The subcontractor will appear in the supplier list.
- Select the subcontractor name to see information about them. From the subcontractor record, edit the profile to make changes, or click New transaction to enter a new bill/expense for this subcontractor.
There are three reports available in QuickBooks for CIS. Currently, these reports will show in Cash Basis based on HMRC's guidelines.
- CIS contractor monthly statement (300)
This report will show you how the CIS return you would submit to HMRC as a contractor.
- CIS payment and deduction statement
This report can be generated on a monthly basis to send to subcontractors and will show liability deductions.
Note: We are working on improving the format for these statements.
- CIS suffered summary
This report shows you a summary of the CIS deductions as a subcontractor from any sales produced.