As a subcontractor who has CIS tax withheld by your contractors, once you've recorded the work done for a contractor, it's easy to record the payment you receive and the CIS tax withheld. Here we'll walk through the steps for the Standard VAT Scheme. If you're on VAT Cash Accounting, you can find more help in our alternative guide.

Post a customer credit for CIS tax withheld

Let's look at the following example:

• We've completed work for Bloggs and Co, the main contractor.
• We've invoiced them for £350, consisting of £200 for labour, and £150 for materials. In this example, both elements are zero rated. 
• The contractor pays us the money due, but retains the CIS Tax value of £40, which they pay to HMRC on our behalf.

First we post a sales credit to the CIS Tax Liability code for the tax withheld:

1. Select Customers then choose Batch credit.
2. Enter details of the CIS tax amount withheld by the contractor. In our example:
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   BLOGGS01	Receipt date	2102 (CIS Tax Liability)	CIS Tax Liability	40.00	T9	0.00

3. Press Save then press Close.

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

Allocate sales credit and record receipt from the contractor

1. Select Bank accounts then select the bank account receiving the payment.
2. On the toolbar, choose Customer receipt.
3. In Account enter the contractor's account reference, then in Date enter the receipt date.
4. Select the customer credit, press Pay in Full, select the customer invoice then choose Pay in Full.
5. Press Save then press Close.

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

Next step

If you receive any CIS tax refunds from HMRC, you can simply post a bank receipt. 

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