Setup CIS (Construction Industry Scheme)¶
Company Contractor and Employee Subcontractors¶
Follow this guide to set up a Company as a Contractor and Employees as Subcontractors.
Setup¶
In update the company and enter your contractor UTR (Unique Taxpayer Reference) and click Update
In Update each employee who will be a subcontractor: in the Tax section change the CIS field to sole trader/partnership/trust or company and click Update. Only change to a CIS type if you can confirm that the employment status of the individual included has been considered and payments will not been made under a contract of employment.
Either enter the Subcontractor Trading name Subcontractor UTR and Company Registration Number (CRN) fields or ask the Subcontractor to complete these fields using their mobile self-service app. Not all fields will apply e.g. a Partnership only has a UTR and Name.
add a CIS300 Report Definition to submit your monthly return
Add a GB CIS Verification data-feed to enable online verification of subcontractors
add a Payslip Report Definition to which has been configured to output the Construction Industry Scheme Payment and deduction statement.
There are 2 CIS specific busses in the system named:
Gross pay for CIS purposes
CIS cost of materials.
Any Pay Definitions used for CIS must be configured to connect to theses busses and not to the PAYE or NIC busses. The normal setup process should provide 2 standard Pay Definitions:
Shift (CIS) 1 for payments
Materials (CIS) 1 for cost of materials
You will notice that the last are numbered which allows for additional definitions to support multiple shifts and materials. Shifts use positive payment values, while Materials must use negative values.
Important
- If your company was not imported using a standard import process, these pay definitions may not exist. Therefore, you must create these and/or any other suitably configured Pay definitions ensuring the output busses are correct:
- For CIS Gross Pay:
In , add a new Pay definition
Select the Per Unit Pay Template
- Un-tick all busses, then tick the following busses:
Gross pay for CIS purposes
.Gross pay
.Net pay
Gross pay for OD purpose
- For CIS Materials:
In , add a new Pay definition
Select the Per Unit, or Deduction Pay Template:
- Un-tick all busses, then tick the following busses:
CIS cost of materials
Gross pay for CIS purposes
Operation¶
Before you pay a new subcontractor, you must ‘verify’ them with HMRC using the CIS Verification data-feed. For every subcontractor who is verified, the feed will update the employee subcontractor verification number with the number received from HMRC together with the deduction rate. You must verify every subcontractor every 2 tax years. The output of this verification is to add the Verification number and Tax treatment status to the CIS Pay Item inputs. Do not modify these values.
Pay Item editor add Shift/Material pay items to the subcontractor and enter appropriate positive Shift and negative Materials values. You may also wish to Upload or use a data-feed for large numbers of pay items.
Limited company CIS deductions suffered¶
If your company is acting a as Subcontractor, you can claim CIS tax deductions suffered in your EPS:
You must enter your Corporation tax Unique Taxpayer Reference in UTR
Enter the value of CIS deductions suffered YTD (year to date) into your EPS report and click Update.
The year to date amount will be sent in your regular EPS together with your Corporation tax UTR to offset your PAYE bill.
If your CIS YTD deductions suffered increase in a future month, you will need to update the value in the EPS report accordingly.
At the end of the tax year, after your final submission of the year has been sent, this value will be cleared ready for the new tax year.