Create a supplier record for your subcontractor

If you haven't already, you need to set up a supplier record for your subcontractor.

1. Click Suppliers then click New.
2. Enter the account details for the subcontractor, click Save then click Close.

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Create a CIS tax withheld nominal code

You also need a nominal code for CIS tax within the Current Liabilities section of the Chart of Accounts. If you already have this you can move onto the next section.

1. On the navigation bar click Nominal codes then click New.
2. Complete the nominal record details as follows:
   

   N/C	Enter the new nominal code number, for example, 2150.
   Name	Enter the name for the new nominal code, for example, CIS Tax.

3. Click Save then click Close.

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Post a supplier invoice for the subcontractor work completed

Let's look at the following example:

• We've received an invoice for £350 from our subcontractor Mr Brown.
• This is made up of £200 for labour and £150 for materials supplied, in this example, both elements are zero rated. 
• We must withhold £40 (£200 x 20%) on the labour element of the invoice for CIS tax. CIS is deducted from the net element of the invoice.
• We need to pay the £40 to HMRC and pay Mr Brown the balance of £310.

First, we post the invoice from our subcontractor:

1. Click Suppliers then click Batch invoice.
2. Enter the invoice details. In our example:
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   BROWN001	Invoice Date	6002 (subcontractors labour)	Labour Charges	200.00	T0	0.00
   BROWN001	Invoice Date	5000 (Materials)	Materials	150.00	T0	0.00

   NOTE: The tax codes used here are an example only. Use the appropriate tax code for the VAT applied on the supplier invoice. If reverse charge applies, you can use the reverse charge tax code, normally T21, standard or T26, lower rated. 

3. Click Save then click Close.

That's our purchase invoice posted. Once we're ready to pay this, we move onto the following section.

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Post a supplier credit for CIS tax withheld

1. Click Suppliers then click Batch credit.
2. Enter details of the CIS tax amount you're withholding. In our example:
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   BROWN001	Payment date	2150 (CIS Tax)	CIS Tax withheld	40.00	T9	0.00

3. Click Save then click Close.

The purchase credit represents the CIS tax withheld and we can now allocate this to the purchase invoice.

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Allocate the credit to the purchase invoice and pay the subcontractor

1. Click Bank accounts then click the bank account to make the payment from.
2. On the toolbar, from the Payments drop-down click Supplier Payment.
3. In Payee enter the subcontractor's account reference, enter the Date and if required, the Cheque No.
4. Click the supplier credit, click Pay in Full, click the supplier invoice then click Pay in Full.
5. Click Save then click Close.

That's it, we've posted a payment for the invoice amount less the CIS tax withheld.

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Pay the CIS tax to HMRC

When it's time to pay the CIS tax over to HMRC, we simply post a bank payment. 

1. Click Bank accounts.
2. On the toolbar, from the Payments drop-down click Bank Payment.
3. Enter the payment details. In our example:
   

   Bank	Date	N/C	Details	Net	T/C	Tax
   Bank N/C	Payment Date	2150 (CIS Tax)	CIS Tax withheld	40.00	T9	0.00

4. Click Save then click Close.

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 Print CIS subcontractor statements

If you want to generate a statement for your subcontractors, you can run a Supplier report.

1. Click Suppliers then click Reports.
2. Click Supplier statements then double-click Statement Individual all Items.
3. Enter the Supplier Ref and Transaction Date.

To cover the tax month, should enter the 6th to the 5th of the following month, for example 06/10/2023 to 05/11/2023.

 [BCB:90:CIS - Sales:ECB]