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.
Start using CIS
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.
How to turn on CIS
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.
How to add a contractor or subcontractor
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.
How to create CIS transactions
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.
Filing your CIS return
As of the 6th August you will be able to file your CIS return directly to HMRC. Before you do make sure that the information in your Account and Settings is correct. To verify please follow these steps:
- Go to the gear icon and select Account and Settings.
- Go to the Advanced tab and expand the CIS settings by selecting the Construction Industry Scheme (CIS) option.
- Verify your UTR no., Employer’s PAYE reference no., and Accounts office reference no.
Once your details have been verified, please follow these steps:
- Go to the Left Navigation and under Taxes, select CIS.
- Select File Return for the period you wish to submit.
- Please verify the return and once fully satisfied, tick the box: I declare that the information on this return is correct and complete. I understand that a false declaration can result in prosecution.
- Select the option Submit to HMRC.
- At this stage, you will be prompted to enter your HMRC credentials.
- Once you have entered your credentials, QuickBooks will begin connecting to HMRC. This usually takes around 60 seconds depending on how busy HMRC are. Please remain on the screen until you receive confirmation that your return has been submitted.
- Once you see the message that your return has been accepted by HMRC, you can close the message and return to the main screen.
If you encounter an error, please verify that your credentials are correct before attempting to file the return again. If you are unable to continue, don’t hesitate to contact our award winning Customer Success team.
Accounting for the Payment made to HMRC
To account for the payment you make to HMRC following a CIS submission:
- Go to create an expense.
- If you have created a supplier for HMRC, then please enter the name in the supplier field.
- Select the bank account from which you have paid HMRC and select the date the payment was made on.
- In the table section, under the Account column select the CIS Withheld account.
- Enter the amount you have paid HMRC.
- Select Save and Close.