Record the receipt from the main contractor  

Let's look at the following example:

• We've completed work for Bloggs and Co, the main contractor.
• We've invoiced them for £200 for labour and in this example, reverse charge VAT applies.
• The contractor pays us the money due, but retains the CIS Tax value of £40, which they pay to HMRC on our behalf.

Although the amount we receive from the contractor is reduced by the amount of CIS tax withheld, we post a receipt for the full invoice amount. This ensures that the VAT Return is correct. In the next section we'll post a bank payment to offset this.  

1. Click Bank accounts, click the relevant bank account then click Customer receipt.
2. In Account enter the contractor's account reference, then enter a date for the transaction.
3. Click the customer invoice then click Pay in Full.
4. Click Save then click Close.

Record the CIS tax withheld

We record the CIS tax withheld as a bank payment to the CIS Tax Liability code. This offsets the customer receipt we posted above and records the CIS Tax withheld.

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	VAT
   Bank nominal code	Date of Payment	2102 (CIS Tax Withheld)	CIS Tax Withheld	40.00	T9	0.00

   The bank nominal code must be the same as that used for the customer receipt.
   
   
4. Click Save then click Close.

TIP: If you want the CIS tax withheld to appear on your customer record, instead of a bank payment you can post a customer batch credit using the T9 tax code, and then refund it.  

Next step