Manually record CIS tax withheld as a main contractor on Standard VAT
Description

As a main contractor, you can record CIS tax withheld from subcontractors directly in your accounts software. The following steps are for the Standard VAT scheme. Follow our alternative article if you're on the VAT Cash Accounting scheme.

 CAUTION: Manual CIS entries don’t meet CIS legal requirements. You need to track and report CIS obligations separately outside of your accounting software. 

The Sage 50 CIS module is available as an add-on in Sage 50 Accounts. If you're interested in adding it, leave your details and we'll be in touch.

Cause
Resolution

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.

Create a CIS tax withheld nominal code

To create a nominal code for CIS tax within the Current Liabilities section of the Chart of Accounts. If you already have this, follow the Post a supplier invoice for the subcontractor work completed 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.

Post a supplier invoice for the subcontractor work completed

Example:

  • You receive an invoice for £350 from your subcontractor Mr Brown
  • This includes £200 for labour and £150 for materials supplied. In this example, both elements are zero rated
  • Withhold £40 (£200 x 20%) on the labour element of the invoice for CIS tax. CIS deducts from the net element of the invoice
  • Pay the £40 to HMRC and pay Mr Brown the balance of £310

First, post the invoice from your subcontractor:

  1. Click Suppliers then click Batch invoice.
  2. Enter the invoice details. In the 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, use the reverse charge tax code, normally T21, standard or T26, lower rated. 

  3. Click Save then click Close.

That's the purchase invoice posted.  


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.


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, click Supplier Payment.
  3. In Payee, enter the subcontractor's account reference, enter the Date, and any references.
  4. Click the supplier credit, click Pay in Full, click the supplier invoice, then click Pay in Full.
  5. Click Save then click Close.

The payment is not posted for the invoice amount less the CIS tax withheld.


Pay the CIS tax to HMRC

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

  1. Click Bank accounts.
  2. On the toolbar, then 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.

 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, enter the 6th to the 5th of the following month, for example 06/10/2024 to 05/11/2024.

  [BCB:90:CIS - Sales:ECB]
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